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Good morning and welcome back to FirstFT. On today’s agenda:
S&P Global last night held its rating on US government debt, saying the revenues from President Donald Trump’s aggressive tariff policies will offset the impact of the administration’s signature tax and spending bill.
Rating maintained: The influential agency said that it would keep its sovereign credit rating at ‘AA+/A-1+’, between its second- and third-highest rating. Analysts at the agency forecast that “broad revenue buoyancy, including robust tariff income, will offset any fiscal slippage from tax cuts and spending increases” planned in the US in coming years.
Why it matters: The verdict comes after the Trump administration hit dozens of its trading partners around the world with new tariffs. Rates on imports have hit the highest level in nearly a century, sparking fears that they will curb global economic growth. In May S&P’s rival Moody’s cut the US from its highest credit rating on fears over the rising levels of government debt and a widening budget deficit in the world’s biggest economy. But S&P forecast the US budget deficit would average 6 per cent of GDP between 2025 and 28, down from 7.5 per cent last year. Read more on S&P’s rating.
Here’s what else we’re keeping tabs on today:
China-India relations: China’s foreign minister Wang Yi is scheduled to meet India’s Prime Minister Narendra Modi in an attempt to ease tension between the world’s two most populous countries.
Economic data: Canada releases consumer price index data for July. Mexico’s national statistics agency publishes its preliminary economic growth figures for the same month.
Companies: Home Depot, Medtronic and bank tech provider Jack Henry report results.
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Five more top stories
1. Donald Trump said the US would help arrange European security guarantees for Ukraine if peace could be agreed with Russia after a day of intense diplomatic talks in Washington. The US president said he pledged to set up a meeting between Volodymyr Zelenskyy and Vladimir Putin. Read more on the outcome of the talks.
Opinion: Trump’s peace juggernaut is careering forward. But few people can tell where it is heading, writes Ben Hall.
2. Canada’s Conservative leader Pierre Poilievre is on track for a comfortable victory in a by-election that will allow him to re-enter parliament after he suffered a crushing election defeat earlier this year. The Conservative leader’s return to parliament is likely to add new pressures on Prime Minister Mark Carney.
3. SoftBank’s billionaire founder Masayoshi Son held talks with Intel’s chief executive about buying its faltering contract chipmaking business. SoftBank announced yesterday it planned to invest $2bn in Intel in exchange for a 2 per cent stake in the troubled US chipmaker after the end of wide-ranging talks between Son and Intel chief executive Lip-Bu Tan.
4. A private equity deal for €6bn UK private school operator Cognita is on the brink of collapse, with a stake sale to the final remaining bidders Blackstone and CVC now unlikely to proceed. Read what the faltering sales process means.
5. Exclusive: BHP has demanded to know who is in charge of a £36bn lawsuit against it after the chief executive of the law firm bringing the case was pushed out by the US hedge fund backing the claim. Suzi Ring has more from London.
The Big Read
The first in a series on organised crime looks at the threat drug cartels pose to Latin America’s stability. With the global cocaine business booming as never before, organised crime groups are diversifying into a swath of other illicit activities. Meanwhile, drug-related violence has become a feature of life in virtually every country in the region.
We’re also reading . . .
The boss is back: Five years after the Covid pandemic forced employers to embrace empathy and flexibility, bosses are back to laying down the law, writes Brooke Masters.
GOP: Patti Waldmeir takes the temperature among Republicans at the Illinois State Fair and finds them in upbeat mood.
US trade policy: Washington is denying itself the benefits of the system that already exists, writes Inu Manak, Council on Foreign Relations fellow.
Chart of the day
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At a Nio battery-swapping station near Shanghai it takes just three minutes to power up an electric vehicle. A series of investments in swapping infrastructure by CATL, the world’s largest battery maker, is set to pave the way towards the wider adoption of the technology in China, the world’s biggest EV market. Read more on how the process works.
Take a break from the news . . .
From sustainable materials to passive design, architects are turning to the tropics for inspiration on how to live in an era of intensifying climate challenges.
