News Round Up: Bond crisis, US Debt, Plague in Russia??

Some interesting news reports, gathered together for your reading enjoyment

French Bond Crisis

French 10-year yield hits highest since 2002, nearing 5%; French-German spread heads for biggest weekly jump since 2007; ECB not expected to step in for France, though analysts say heavy selling raises pressure

As the premium investors demand to hold French 10-year bonds over safer Germany shot above 150 basis points on Friday, talk began to grow about how severe the selloff could become and whether neighboring countries can be shielded with the help of the European Central Bank (ECB).

France’s 10-year bond yield rose to near the 5% mark, hitting its highest since 2002. The premium investors demand to lend to France, rather than Germany, was set for its biggest weekly jump since at least 2007, with a rise of at least 40 basis points, according to LSEG data .

“The speed at which the spread has got here is what is concerning,” said Seema Shah, chief global strategist at Principal Asset Management.

While some investors hope the ECB will intervene, the central bank is “caught between a rock and a hard place” as it would have to consider buying bonds while tightening monetary policy, she said.

The ECB’s Transmission Protection Instrument allows it to buy an unlimited number of bonds from any euro zone country experiencing an “unwarranted, disorderly” tightening of its financing conditions.

US Debt Now larger than China, Japan, UK and France Combined

U.S. Debt Is Now Larger Than China, Japan, UK and France Combined

U.S. national debt has climbed above $40T, exceeding the combined government debt of China, Japan, the UK and France as global debt hits a record $365.5T.

Europe’s Diesel Woes Just Got Even Worse

Europe’s diesel supply crunch is worsening, with imports hitting a record September low as China suspends fuel exports and Russian supplies remain constrained. Europe is heavily dependent on imported diesel, after decades of diesel-focused demand and the closure of roughly 30% of EU refineries since 2009. – Strategic stock releases may become unavoidable, particularly if the U.S. restricts diesel exports before Persian Gulf fuel flows recover.

China this week announced it will suspend all fuel exports this month to keep its domestic market supplied. Also this week, President Donald Trump demanded that Germany and France release 120 million barrels of diesel from their storage or get hit with a U.S. diesel export ban. Europe is running out of options to stay well supplied with a critical fuel.

Diesel is the fuel, on which any economy runs. While it may feature less commonly in passenger cars these days, diesel is the default fuel for heavy machinery, agriculture, and freight transport. This makes import-dependent nations especially vulnerable to the kind of shock that the world is experiencing right now, and Europe is full of import-dependent nations.

According to Euronews, gasoline prices in the European Union have added some 29% since the start of the year, while diesel fuel prices have swelled by 40%. ECB officials expected diesel margins to peak this month, citing peak gasoline margins in August, after which they declined, but it does not seem like their prediction will come true as China just imposed a fuel export ban on its refiners. Chinese refiners are canceling gasoline and jet fuel shipments as well.

Tanker Explosions Of Yemen’s Coast

A tanker reported multiple explosions near the vessel off Yemen’s coast on Sunday, according to the United Kingdom Maritime Trade Operations (UKMTO).

In a warning, UKMTO said the incident occurred 60 nautical miles south of the port city of Mokha.

The tanker’s company security officer reported seeing multiple explosions in close proximity to the vessel, the agency said.

One of the men involved in the diesel fuel theft reported the incident to the police, prior to party goer report

One of the men involved in the suspected plot on a Royal Air Force base reported the incident to police himself, it has emerged…

Officials previously said they had received a call relating to three “suspicious vehicles which appeared to be travelling towards the air base” at 12.45am on Sunday.

So was the party goer story created, to present a specific narrative and to cover up the fact that one of the diesel thieves already reported the theft?

Possible Plague death in Russia scrutinized by the US

I see tons of headlines this morning

A State Department spokesperson told CNN on Sunday that the US is working with the Centers for Disease Control and Prevention on the matter.

“We are monitoring the situation closely with the CDC and our other interagency partners,” the spokesperson said. “We encourage Russian authorities to share accurate information quickly and openly”, he added.

The White House is also aware of the case and weighing its options, Axios reported, citing a Trump administration official.

Daria Shipilova, 28, worked at a research institute in Russia’s Irkutsk region that deals with plague. Local media, cited by Axios, reported that she broke a test tube containing the pneumonic plague pathogen on 25 September.

She was hospitalised four days later with severe pneumonia and died overnight on 1-2 October.