Economy

Typical household energy bills are set to rise to about £2,800 a year in October, the energy regulator warned on Tuesday, as the scale of the cost of living crisis facing Britain was laid bare.Rishi Sunak, the chancellor, has been putting the finishing touches to a mini-Budget worth billions of pounds to help households struggling with soaring energy prices; senior government figures say he could present it as early as this Thursday.Tory officials say Boris Johnson wants to set out the energy support package before the House of Commons breaks for its Whitsun break on Thursday, as he tries to move the political debate on from the “partygate” scandal around Covid rule-breaking gatherings in Downing Street.But the prime minister and Sunak have yet to agree on a final package and key issues, including an energy windfall tax, remain contentious. If time runs out, the chancellor will have to wait until MPs return to Westminster in early June.Why is a support package needed?Jonathan Brearley, Ofgem chief executive, told MPs on Tuesday he expected the energy price cap to rise to about £2,800 when it is next increased in the autumn, a jump of over £800 compared to April’s figure of £1,971. It will have risen £1,500 in a year. Brearley warned that the price cap was still to be finalised and could be higher if gas prices rose further — if, for example, supplies from Russia to the EU were disrupted. The Resolution Foundation think-tank warned that the rising energy cap would push almost 10mn families in England into “fuel stress”, meaning they would be spending more than 10 per cent of their total budgets on energy.With prices rising across the board — the Bank of England thinks inflation could top 10 per cent in the autumn — Sunak is now promising to do more to alleviate the biggest crunch in living standards for a generation.Who would the measures cover?The chancellor in February provided £9bn in support to help offset the rise in domestic energy bills, including a £150 council tax rebate and a £200 loan.But he was widely criticised for failing to offer more help to the poorest people, and especially those unable to work, in his March Spring Statement. Some in the treasury now acknowledge that this was a mistake.In his emergency energy package, Sunak will target most of his support on those on the lowest incomes, although there will also be help for what his allies call “the squeezed middle” of core Tory voters.If Sunak chose to cover the entire £800 energy price rise for 8mn of the poorest households, it would cost about £6.5bn. A more broadly targeted package would cost considerably more.How will support be given?Torsten Bell, chief executive of the Resolution Foundation, says the most obvious way to help the most vulnerable is to use either the benefits system or targeted support via the Warm Homes Discount, which goes to the poorest households. Paul Johnson, director of the Institute for Fiscal Studies, said that some 7mn people would eventually be on universal credit and it would be a good way to target support.But after Sunak announced a £20 a week “temporary” uplift to UC at the start of the Covid pandemic in March 2020, he found it extremely tough politically to claw the money back again. An alternative would be to bring forward what are expected to be very big increases in benefits due in April 2023, which are linked to the September 2022 inflation rate. “I don’t understand why they haven’t done that already,” Johnson said. The council tax system has proved an administratively complex way to help people and as a result, Sunak is expected to expand the Warm Home Discount, which is currently due to offer a £150 energy bill rebate to 3mn households this autumn. Eligibility could be extended to another 5.5mn households in receipt of either pension credit or working age benefits. Kwasi Kwarteng, the business secretary, is said by Tory colleagues to have proposed boosting the rebate to £500, funded by the taxpayer. A separate winter fuel payment could be used to help pensioners.“There will be subsequent announcements soon which I think could well look at the Warm Homes Discount,” Kwarteng told MPs on Tuesday. Will tax cuts be included?Sunak has been urged by Tory rightwingers to bring forward a 1 percentage point cut in income tax — scheduled for 2024 — or to cut VAT on domestic energy bills to stop the economy slipping into recession.The pressure on the chancellor address demands for a tax cut front will be intense — not least from Boris Johnson — but Sunak is anxious to avoid “pouring fuel on to the fire” of inflation, according to Johnson of the IFS.The chancellor strongly agreed with German finance minister Christian Lindner, who said at a G7 meeting this month: “At this stage, there is no need for a broad-based, debt-financed demand stimulus, which would actually be more likely to be dissipated by additional price increases.”Sunak knows he will be criticised by some Tory MPs for funding part of his rescue package through a windfall tax on energy companies, which could raise several billion pounds.But Johnson said the economic case for such a tax was less to do with the public finances and more to do with helping Sunak reduce inflation-fuelling deficit spending. More

A gaffe, a domestic political gambit, a cunning diplomatic stratagem or a simple moment of honesty: there are several ways to interpret Joe Biden’s pledge this week, during a visit to Tokyo, to use military force if Taiwan is attacked by China. What is clear is that the US president’s sabre-rattling against China was a great deal more prominent than his willingness to offer meaningful economic engagement with US partners in Asia. If the US is serious about winning the contest for influence in 21st-century Asia, that is the wrong way around.Biden’s comments — the third time he has made similar remarks — appeared to reverse decades of US policy of “strategic ambiguity” over Taiwan. A generous interpretation would say that was the intent; to deter aggression by an increasingly powerful China. However, that analysis was undermined by the White House, which wasted no time in rowing back yet again from the president’s words. Then on Tuesday, a joint fly-by of Chinese and Russian nuclear-capable bombers across the Sea of Japan — while Biden was in Tokyo meeting counterparts at the Quad security grouping summit — showed that any sabre-rattling America could do, they could do better.Both incidents meant Biden’s first trip to Asia as president — a chance to bolster alliances and show the region is still his top foreign priority, despite the war in Ukraine — struggled to produce a positive agenda. That was always the risk when the centrepiece of the trip’s trade initiatives was the underwhelming Indo-Pacific Economic Framework. It is a deal that does not include meaningful market access to the US but instead promises help with clean energy and common digital standards. The fact that 12 Asian countries are participating is in no small part due to the efforts of Japan rather than because of the attractiveness of what the US is offering. At a time when China is striking large regional trade deals such as the Regional Comprehensive Economic Partnership, the IPEF is obviously underpowered. It leaves Asian countries beyond the obvious US allies wondering why they should bother to engage. They can read, as well as anybody else, the polls that show Biden’s approval rating heavily in negative territory. They assume he will be a lame duck after November’s midterm elections. And they must reckon with the possibility that the US will elect a Republican in 2024 — maybe even Donald Trump again — who will be just as bellicose on China while tearing up the feeble initiatives Biden has offered.The US ought to do better. The IPEF could become the vehicle for a more meaningful regional trade and investment policy, but only if Biden is willing to give it some real content. The ideal would be for the US to come back to TPP, the deal that Trump pulled out of in 2017 and which has since been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Biden, too, decided imports were politically toxic and opposition to the CPTPP in Congress seems insurmountable for now. China, meanwhile, is eager to join the CPTPP, though its path to membership will be long and fraught. The UK has also applied. If it is successful, it could find a useful role in brokering a US return. But for the US to follow that path would first require Biden to want to shift the domestic political narrative on trade deals from one where they imperil American jobs to one where they help cement American security. If the US really wants to be the attractive superpower partner relative to China, it needs to elevate the diplomatic and economic sides of its engagement with Asia to the same level as its military commitment across the region. More

Shares in some of Britain’s biggest power companies fell sharply on Tuesday over concerns that the government will hit electricity generators as well as oil and gas companies with a windfall tax.Pressure is mounting on ministers to do more to help households offset the soaring cost of living as the UK regulator warned that domestic energy bills were expected to jump more than 40 per cent later this year. Shares in Drax, owner of the UK’s biggest power station, tumbled 16 per cent, Centrica dropped 10 per cent and SSE fell almost 9 per cent in London on Tuesday after the Financial Times revealed that UK chancellor Rishi Sunak had ordered officials to widen the scope of a potential windfall tax.The Treasury had already been looking at imposing a levy on the profits of North Sea producers, including BP and Shell, which have reported bumper profits driven by high oil and gas prices in the last year. But officials have also been asked to look at expanding the levy to other companies in the energy supply chain as domestic energy bills have soared.Jonathan Brearley, Ofgem’s chief executive, told MPs that he expected the price cap, which limits the amount the vast majority of British households pay for gas and electricity, to rise 42 per cent to about £2,800 a year in October. The price cap is currently set twice a year but the regulator has proposed to shift to quarterly reviews.Brearley told the House of Commons business select committee on Tuesday that volatility in energy markets had worsened since Russia’s invasion of Ukraine and that there was little sign of a sustained retreat in prices.“We are expecting a price cap in October of £2,800,” Brearley told the committee, adding that he would send a letter to Sunak later on Tuesday. Ofgem has already raised the annual price cap to £1,971 in April. At the end of 2020 it stood at £1,042.Energy suppliers have warned that 30 to 40 per cent of households could end up in fuel poverty in the coming winter.Analysts said a levy on electricity generators would also hit several large foreign-owned energy companies, including ScottishPower, a subsidiary of Spain’s Ibedrola, France’s EDF Energy and Germany’s RWE.The proposed wider windfall tax would also include smaller generators that benefited from an early subsidy scheme to encourage the construction of low-carbon energy generation, which are thought to have profited handsomely from high wholesale power prices. But business secretary Kwasi Kwarteng distanced himself from a looming energy windfall tax on Tuesday, telling the committee that he had been very clear in his opposition to it not least as it could harm UK efforts to hit its 2050 net zero target by discouraging generators from investing in renewables.“We are asking generators to deploy record amounts of capital to build the infrastructure we need to hit the net zero target so I think that is a challenging proposition,” he said.Kwarteng said that Sunak was also “instinctively against windfall taxes” but did not deny that the policy was becoming increasingly likely. “If [Sunak] feels that these extraordinary times require extraordinary measures, that’s up to him,” he said.Investec’s energy analyst Martin Young agreed with Kwarteng, saying that ministers backing a windfall tax should be “careful what [they] wish for”.Oil and gas producers also criticised plans for a levy. Linda Cook, chief executive of Harbour Energy, the biggest oil and gas producer in the North Sea, told a conference in Aberdeen that additional taxes “would be detrimental to energy sector investment levels, to our domestic energy security and to our sector’s ability to further the country’s energy transition ambitions”.Sunak’s officials are working on a windfall tax model for North Sea oil and gas producers similar to the one introduced by then chancellor George Osborne in 2011, according to those briefed on the policy. Osborne increased the “supplementary charge” levied on oil and gas production and raised £2bn. The extra charge only fell to its original level when the oil price returned to a trigger price of $75 a barrel.Executives are privately resigned to the likelihood of a windfall tax. “We are probably in the situation where it is inevitable,” said one.Ben van Beurden, Shell chief executive, told the company’s annual shareholders meeting that there were “good ways and bad ways of designing a tax structure, and if you do it in a bad way it can discourage investment”. He said the way the existing supplementary charge was designed would allow companies such as Shell, which invest in green projects, to offset investments in renewables against the expected levy.Dan Alchin, director of regulation at Energy UK, said that generators had invested billions to help transform the country’s energy system, and were “ready to deliver billions more to help the country reach its climate change targets”.“We need to be careful of any actions that could inadvertently jeopardise the pathway to energy security, net zero and reliable low-cost electricity,” he said.Additional reporting by Tom Wilson More

Is there going to be a recession in the US and other leading economies? This question has naturally arisen among participants at this year’s meeting of the World Economic Forum in Davos. This is, however, the wrong question, at least for the US. The right one is whether we are moving into a new era of higher inflation and weak growth, similar to the stagflation of the 1970s. If so, what might this mean?The similarities are evident between the present “surprise” upsurge in inflation to levels not seen in four decades and that earlier era, when inflation was also a surprise to almost everybody, except the monetarists. That era was also characterised by war — theYom Kippur war of 1973 and the invasion of Iran by Iraq in 1980. These wars, too, triggered jumps in oil prices, which squeezed real incomes. The US and other high-income economies experienced almost a decade of high inflation, unstable growth and weak stock markets. This was followed by a sharp disinflation under Paul Volcker, chair of the Federal Reserve, and the Reagan-Thatcher shift towards free markets.At the moment, few expect anything similar. But a year ago few expected the present upsurge in inflation. Now, as in the 1970s, the rise in inflation is blamed on supply shocks caused by unexpected events. Then, as now, that was a part of the picture. But excess demand causes supply shocks to turn into sustained inflation, as people struggle to maintain their real incomes and central banks seek to sustain real demand. This then leads to stagflation, as people lose their faith in stable and low inflation and central banks lack the courage needed to restore it.At present, markets do not expect any such outcome. Yes, there has been a decline in the US stock market. Yet by historical standards, it is still very expensive: the cyclically-adjusted price/earnings ratio of Yale’s Robert Shiller is still at levels surpassed only in 1929 and the late 1990s. At most this is as a mild correction of excesses, which the stock market needed. Markets expect short-term interest rates to stay below 3 per cent. Inflation expectations, shown by the gap between yields on conventional and index-linked treasuries, have even fallen a little recently, to 2.6 per cent.In all, the Fed should be delighted. Movements in the markets indicate that its view of the future — a mild slowdown triggered by a mild tightening leading to swift disinflation towards target — is widely believed. Only two months ago, the median forecasts of Federal Reserve board members and regional presidents for 2023 were of growth of gross domestic product at 2.2 per cent, core inflation down to 2.6 per cent, unemployment at 3.5 per cent and the federal funds rate at 2.8 per cent.This is immaculate disinflation indeed, but nothing like this is likely to occur. US supply is constrained above all by overfull employment, as I noted just two weeks ago. Meanwhile, nominal demand has been expanding at a torrid pace. The two-year average of growth of nominal demand (which includes the Covid-hit year of 2020) has been over 6 per cent. In the year to the first quarter of 2022, nominal demand actually grew by more than 12 per cent.The growth of nominal domestic demand is arithmetically the product of the rise in demand for real goods and services, and the rise in their prices. Causally, if nominal demand expands far faster than real output can match it, inflation is inevitable. In the case of such a large economy as the US, the surge in nominal demand will also affect prices of supplies from abroad. The fact that policymakers elsewhere followed similar policies will reinforce this. Yes, the Covid-induced recession created significant slack, but not to this extent. The negative supply shock of the war in Ukraine has made all this worse.Yet we cannot expect this rapid growth in nominal demand to slow to the 4 per cent or so that is compatible with potential economic growth and inflation both at around 2 per cent annually, each. The growth of nominal demand is vastly higher than interest rates. Indeed, not only has it reached rates not seen since the 1970s, but the gap between it and the 10-year interest rate is vastly greater than then.Why would people seeing their nominal incomes grow at such rates be afraid to borrow heavily at low interest rates, particularly when many have balance sheets made stronger by Covid-era support? Is it not far more likely that the credit growth and so nominal demand will stay strong? Consider this: even if annual growth in nominal demand were to collapse to 6 per cent, that would imply 4 per cent inflation, not 2 per cent.The combination of fiscal and monetary policies implemented in 2020 and 2021 ignited an inflationary fire. The belief that these flames will go out with a modest move in interest rates and no rise in unemployment is far too optimistic. Suppose, then, that this grim perspective is correct. Then inflation will fall, but maybe only to 4 per cent or so. Higher inflation would become a new normal. The Fed would then need to act again or have to abandon its target, destabilising expectations and losing credibility. This would be a stagflation cycle — a result of the interaction of shocks with mistakes made by fiscal and monetary policymakers. The political ramifications are disturbing, especially given a vast oversupply of crazy populists. Yet the policy conclusions are also clear. If the 1970s taught us anything, it is that the time to throttle an inflationary upsurge is at its beginning, when expectations are still on the policymakers’ side. The Fed has to reiterate that it is determined to bring the growth in demand down to rates consistent with US potential growth and the inflation target. Moreover, it is not enough just to say this. It must do it, [email protected] Martin Wolf with myFT and on Twitter More

A step of 50 basis points would be “appropriate” in July, the Austrian governor said in an interview in Vienna on Tuesday, contrasting with ECB President Christine Lagarde’s more cautious approach in a blog post the previous day suggesting a quarter-point move.“A bigger step at the start of our rate-hike cycle would make sense,” said Holzmann, one of the most hawkish members of the Governing Council. “It would keep people on their toes and signal to markets that we’ve understood the need to act. Everything else risks being seen as soft.”The euro extended gains versus the dollar and short-end German bonds pared their advance after the publication of Holzmann’s comments. Traders held rate-hike bets steady, wagering on about 34 basis points of ECB tightening by July.A half-point hike would echo the US Federal Reserve’s more aggressive approach adopted earlier this month, when it accelerated its tightening with a move of that size. More than 40 global counterparts have also used increases of at least that increment so far this year. Lagarde’s timetable signaling two smaller hikes by the end of the third quarter irked hawkish officials wanting the option to act more aggressively, according to people familiar with the matter. “I appreciate her speaking up and realizing that the time for liftoff has come, but I would have liked to see clear communication about how we’ll get to neutral rates,” Holzmann said on the president’s new message on monetary policy.  Bank of France Governor Francois Villeroy de Galhau told Bloomberg Television on Tuesday that the ECB consensus doesn’t currently favor a half-point move. Holzmann is only the second official on the 25-member Governing Council to openly air the possibility of such a large hike. His Dutch colleague, Klaas Knot, said on May 17 that he would prefer a quarter-point increase, “unless new incoming data in the next few months suggests that inflation is broadening further or accumulating.” The ECB first outlined plans to unwind unprecedented monetary stimulus last December, and has accelerated its schedule repeatedly since then after inflation climbed from one record to the next. Traders are pricing in four quarter-point hikes this year, which would take the deposit rate — currently at -0.5% — firmly back above zero after for the first time in almost a decade.  “It’s extremely important to end the year in positive territory, and it would be justified given inflation will remain above 2% also in 2023 and 2024,” Holzmann said. “It’s time for monetary policy to act and to remove monetary accommodation.”Earlier on Tuesday, Lagarde told Bloomberg Television in Davos that the ECB won’t rush into withdrawing stimulus. She and Villeroy de Galhau both emphasized that policy normalization needs to proceed gradually. At the moment, the ECB insists policy shifts must reflect specific forward guidance, a tool that proved crucial when inflation was too low and the ECB’s room to maneuver on interest rates and asset purchases was stretched. Holzmann argued there’s no need for this instrument anymore.“We shouldn’t keep markets in the dark and communicate our intentions,” he said. “But the strict forward guidance we have currently no longer makes sense with inflation that high.” (Updates with market reaction in fourth paragraph)©2022 Bloomberg L.P. More

BUENOS AIRES (Reuters) – Argentine peso bills, devalued by years of inflation now soaring near 60%, are starting to cause a literal strain on wallets – with the largest banknote in circulation worth under $5 in commonly used exchange markets.That means people need to carry around huge wads of cash, a security concern and logistical headache for savers, businesses and banks.The situation marks Argentina out in the region, except perhaps for outlier Venezuela. The largest note in Mexico and Peru is worth around $50, in Brazil it is $40, in Chile and Colombia some $25 and in Paraguay $15.In Argentina the 1,000 peso note is technically worth $8.40 using the official exchange rate, but with strict capital controls limiting dollar purchases most people use alternative markets where the same amount gets you $4.80.Ten years ago, 1,000 pesos was worth $200. Until around two decades ago the same amount would have got you a full $1,000.”I have to carry that huge wad of bills in my wallet, because it doesn’t fit in my pockets, and I fear getting robbed,” said Laura, 40, a lawyer from capital Buenos Aires.”The 1,000-peso bill is no longer enough for anything. The (monthly) rent for my house is just over 50,000 pesos.”Years of high inflation, tight capital controls since 2019 to prevent currency flight, and popular black markets for trading dollars have hit confidence in the peso.The low value of the biggest tender means many businesses in the cash-heavy economy are left with huge physical piles of money at the end of the day. It is not unusual for people to arrive to pay larger outlays with bricks of banknotes.”The denomination of the bills is very decoupled from the average transactions of the economy,” said Camilo Tiscornia, director of C&T Asesores Economicos, adding that this creates inefficiencies in the market. “You have to make ridiculous payments with a huge number of bills.” A 1,000 peso note will hardly buy you two packages of top-end toilet roll, while a children’s menu hamburger with fries in a fast-food chain comes in at 940 pesos.While electronic payments have increased during the COVID-19 pandemic, a large part of sales are still made in cash.President Alberto Fernandez, who is trying to lead a “war against inflation,” unveiled newly designed banknotes on Monday, but there were no changes to the largest denomination. He contends that the solution is finding a way to curb inflation, not issuing bigger denomination bills.A financial sector source said the situation was also straining bank vaults, where physical cash simply takes up more room and creates higher costs.”For banks it is crazy time with operating and storage costs,” the source said, asking not to be identified. “Here we have entities that are saturated with banknotes.” Argentina: Paying the bill – https://graphics.reuters.com/ARGENTINA-CURRENCY/lbvgndljkpq/chart.png 1babb7e9-15f8-422d-aaee-f7496196df251 More

Growth in UK manufacturing and services activity has slumped much more than expected and to the lowest rate since January 2021, when the country was in a full lockdown, as the cost of living crisis hit demand.The interim, or flash, S&P Global/CIPS UK composite purchasing manager index, a barometer of the change in private sector activity relative to the previous month, fell sharply to a 15-month low of 51.8 in May, down from 58.2 in April.The reading, based on interviews conducted between May 12 and 20, was much worse than the 56.5 forecast by economists polled by Reuters. Any reading above 50 signifies a majority of businesses reporting an expansion in activity.Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey results “point to the economy almost grinding to a halt as inflationary pressure rises to unprecedented levels”.Williamson added that forward-looking indicators were “hinting that worse is to come” and noted that businesses cited an increasingly cautious mood among households and business customers, linked to the cost of living crisis, Brexit, rising interest rates, China’s lockdowns and the war in Ukraine.Sterling dropped 0.8 per cent against the dollar on the news. Gilt yields, which move inversely to prices, also fell.The market reaction “indicates just how deep-rooted growth fears are at present”, said Sandra Horsfield, an economist at Investec. The slump in the PMI index “is a clear sign that the economy looks set to worsen after contracting by 0.1 per cent in March and increases the chances of a bigger fall in the second quarter and of a recession this year”, said Thomas Pugh, economist at RSM UK. He added that the jump in the input prices index to a new record suggested that inflation had further to rise after hitting a 40-year high of 9 per cent in April. Survey respondents overwhelmingly cited higher wage bills, energy costs and fuel prices among the reasons for operating expenses rising at the fastest pace since this index began in January 1998.This reinforces the view that the hit to the economy is unlikely to prevent the Bank of England from increasing rates again in an attempt to rein in fast rising prices. Markets expect the bank’s policy rate to rise by more than 100 basis points by the end of the year from its current 1 per cent. Concerns about squeezed margins and weaker order books resulted in a considerable drop in business expectations for the year ahead. Service providers showed the greatest loss of momentum in May with the corresponding index dropping to 51.8, down from 58.9 in April. Survey respondents often noted that economic and geopolitical uncertainty had contributed to a slowdown in client demand. This is despite many businesses in the travel, leisure and events sector reporting strong growth due to the easing of Covid-19 restrictions.

The manufacturing PMI index showed a smaller deterioration in growth but factories reported the steepest drop in export orders since June 2020.The tumble in the UK composite index was in stark contrast with the stability of the corresponding index for the eurozone, which was boosted by a later reopening than in the UK. “The tailwind from the reopening of the economy has faded, having been overcome by headwinds of soaring prices, supply delays, labour shortages and increasingly gloomy prospects,” said Williamson. More

LONDON (Reuters) -Rising borrowing costs and the worldwide fallout from the Russia-Ukraine war could see up to 10% of riskier ‘junk’-rated emerging market countries suffer debt crises this year, analysts at U.S. investment bank JPMorgan (NYSE:JPM) have warned.More acute balance of payment pressures and larger fiscal deficits are now compounding problems for heavily-indebted countries that import most of their energy and food.Sri Lanka has just suffered its first ever sovereign default, joining a list that already included Lebanon, Suriname, Venezuela and Zambia. Russia and Ukraine are both teetering too and the worry is the numbers globally will soon balloon.”Nearly half of the (52) country sample is classified as carrying high repayment risk in our assessment. Of these, eight are at risk of reserve depletion by the end of 2023, signalling high default risks. These are Sri Lanka, Maldives, Bahamas, Belize, Senegal, Rwanda, Grenada, and Ethiopia,” said the note led by strategist Trang Nguyen on Tuesday. A jump in world interest rates in response to fast-rising inflation also means many countries are facing the reality of rising borrowing costs, a departure from over a decade of so-called “easy money”. “Accounting for risks of a potential default in Russia and restructuring in Ukraine…the EM sovereign HY default rate could reach 10% this year,” JP Morgan’s note added, also pointing out how Ethiopia was moving towards a G20-led restructuring of its debts.The International Monetary Fund too has said that nearly 60% of low income countries are either in, or at high risk of, debt distress. Analysts at investment firm Tellimer this week highlighted how a record 27 emerging market countries now have eurobond yields above 10%. Those yields are a proxy for what a government has to pay to borrow in the international capital markets and anything above 10% is generally seen as a sign of trouble. JP Morgan said that in addition to the eight countries flagged as in immediate default danger, larger economies such as Egypt, Ghana and Pakistan were also highly vulnerable from fiscal and debt standpoints over the slightly longer term. 9c325c13-c3f3-43d0-aa93-27ee523dc29c1Countries with bond yields above 10%https://tmsnrt.rs/3NrBtQoimage/pnggraphics:graphic:1https://fingfx.thomsonreuters.com/gfx/mkt/znpneoxyjvl/Pasted%20image%201653389128073.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:znpneoxyjvl More