EconomyFirstFT: Bridgewater bets against US and European corporate bonds

FirstFT: Bridgewater bets against US and European corporate bonds


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Bridgewater is betting on a sell-off in corporate bonds this year as the world’s largest hedge fund takes a gloomy view on the trajectory of the global economy.

The wager against US and European corporate debt underscored Bridgewater’s view that weakness across financial markets will not be shortlived.

“We’re approaching a slowdown” — Greg Jensen, one of Bridgewater’s chief investment officers, told the Financial Times

Jensen warned that inflation would be far stickier than economists and the market have predicted, which could put pressure on the Federal Reserve to raise interest rates higher than expected by Wall Street.

Bridgewater had already been positioning for a sustained sell-off in the $23tn US government bond market and has wagered similarly on equity prices falling further even after collectively shedding $9tn in value this year.

High-grade US corporate bonds are down about 13 per cent this year on a total return basis, while those in Europe have fallen 15 per cent, according to ICE Data Services indices.

US Treasury secretary Janet Yellen has urged Congress to pass measures to ease price pressures as inflation has reached its highest level in four decades.

Line chart of The spread on the ICE BofA US high yield index (bps) showing Junk-rated US corporate bonds have slid in price this year

Have any feedback for the newsletter? Share it with me at firstft@ft.com. Thanks for reading FirstFT Europe/Africa. Here’s the rest of today’s news — Jennifer

1. Zelenskyy: Stalemate with Russia ‘not an option’ Ukraine’s president Volodymyr Zelenskyy said in an interview with FT editor Roula Khalaf at the FT Global Boardroom conference that pushing Russian forces back to positions occupied before the invasion would amount to a “serious temporary victory” but full territorial sovereignty remained his ultimate goal. “We are inferior in terms of equipment and therefore we are not capable of advancing,” he said, appealing for western military support.

2. UK rail and air travellers face summer of misery The chief executive of London’s Heathrow airport has warned it would take 12 to 18 months for the aviation industry to return to pre-pandemic levels after thousands of holidaymakers were stranded by flight cancellations, while the largest rail union announced the biggest strike action in 30 years.

3. Credit Suisse pushed for spyware sales at NSO The Swiss lender pressed NSO Group to keep selling its Pegasus spyware to new customers just weeks after the US blacklisted the Israeli cyberweapon manufacturer, saying authoritarian regimes had used the tool to silence dissent.

4. Europe at risk of winter energy ‘rationing’ Fatih Birol, head of the International Energy Agency, has warned in an interview with the FT that Europe is at risk of energy rationing this winter, particularly if cold weather coincides with resurgent economic demand in China, in some of the toughest comments yet about the scope of possible energy shortages.

5. EU to get single standard charger Companies including Apple will be forced to adopt a common charger for devices such as smartphones and laptop computers in the EU under a long-awaited law, which will come into effect in 2024. Brussels regulators had advocated for more than a decade to counter waste and limit the number of chargers consumers needed.

The day ahead

OECD report The group will publish its periodic outlook for the global economy, OECD members, G20 countries and critical partners.

  • Other economic data: The EU has first-quarter gross domestic product and household consumption out, France releases March trade balance data and Italy publishes April retail sales. Russia has its May consumer price index.

Football corruption trial The fraud trial of former Fifa president Sepp Blatter and ex-Uefa chief Michel Platini over a 2011 payment of SFr2mn ($2.19mn) begins in the Swiss Federal Criminal Court.

Corporate earnings Marta Ortega, daughter of Inditex co-founder Amancio Ortega, will shepherd her first earnings call after taking over as chair of the Spanish clothing company in April. Hungarian low-cost carrier Wizz Air publishes full-year results.

What else we’re reading and listening to

How space debris could threaten modern life After 65 years of space flight, the area around Earth is littered with 9,000 metric tonnes of debris, according to Nasa, all zooming uncontrollably around at 25,000km an hour. Check out our interactive on the increasing threat posed by space junk.

The FT’s Investing in Space conference begins today, online and in person at the Pan Pacific hotel in London, including an interview with astronaut Samantha Cristoforetti from the International Space Station. Register here.

Who rules porn? Stoya is a porn star who saw first-hand how free porn online transformed the adult industry. She sends the hosts of our new Hot Money podcast, Alex Barker and Patricia Nilsson on a quest: find out who’s in charge, and get to the bottom of how the business works.

Business needs a better childcare system Children are expensive. Just how expensive could become more of an issue for British businesses, as inflation soars and the cost of living crisis starts to properly pinch, leaving parents stuck with higher costs and difficult decisions in an already extremely tight labour market, writes Cat Rutter Pooley.

TikTok Shop’s troubled UK expansion A culture clash between the social media group’s Chinese owners and some of its London employees has triggered a staff exodus and complaints about a “toxic” corporate culture that runs counter to typical working practices in Britain.

Johnson’s hollow victory is a bad outcome for Britain Despite his nominal win in a confidence vote, the magnitude of the protest against Boris Johnson is a bad result for him and, above all, the country as it faces momentum challenges at home and abroad, writes our editorial board.

House & Home

There’s an awkward silence in our cities’ streets, writes Joy Lo Dico. Cities aren’t running at full pelt these days, with the number of pedestrians falling in Times Square, New York, and London, the UK. Where has everyone gone?

Thank you for reading and remember you can add FirstFT to myFT. You can also elect to receive a FirstFT push notification every morning on the app. Send your recommendations and feedback to firstft@ft.com. Sign up here.



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