Economy

JPMorgan’s digital bank Chase has launched a new UK savings account with a 1.5 per cent rate, outpacing high street competitors offering better deals for customers following rate rises from the Bank of England. UK savers are under pressure as inflation hit a 30-year high of 6.2 per cent last month, with a further rise set for April when regulated energy prices are set to jump and as war in Ukraine raises concerns over the cost of fuel and other commodities.“With the cost of living increasing, we know that consumers want to maximise the interest they can earn with the reassurance of being able to access their savings instantly,” said Shaun Port, Chase’s UK managing director for savings and investments.Chase’s new easy access account, which is linked to a current account from the digital bank, will allow savers to deposit up to £250,000 in total which can be accessed at any time. Customers can open up to 10 separate saver accounts. “This is clearly a carrot from the digital bank to try and drive new current account openings and in the current market l expect it will be swamped with applications,” said Andrew Hagger, a personal finance writer at Moneycomms.co.uk.Other lenders are set to raise the rates on their savings accounts next month, though not to the same rate. The rate on Lloyds Bank’s and NatWest’s instant saver accounts will rise from 0.01 per cent to 0.1 per cent, although other products saw larger increases. While Chase does not have a minimum income requirement for a current account it requires smartphone access and does not currently offer joint accounts, said Hagger, potentially limiting some customers. “Let’s just hope that the rate is more than a short term incentive that then gets cut just a few months down the line,” he said.JPMorgan launched Chase in the UK retail market last year, its first overseas retail bank in the company’s 222-year history, in a move compared to Goldman Sachs’ decision to launch consumer bank Marcus in 2018. At launch, Chase initially offered only current accounts with a rewards programme.The UK retail market has been an attractive test bed for US banks seeking to expand digital offerings, with its strong fintech scene and well-established payments infrastructure. Open Banking standards, which are meant to give customers more control over their data, in theory allow them to switch banks more easily.This month, the FT reported that the decision to launch Chase in competition with digital players such as Revolut, Monzo, Starling and an array of high-street brands has drawn questions, at a time when rivals such as Citigroup are shrinking their international operations. Big banks’ efforts to launch digital brands have had mixed success. JPMorgan’s first effort, US bank Finn, closed after a year. NatWest’s homegrown digital bank Bówas shuttered in 2020, lasting less than six months.Soaring inflation is now expected to hit 8 per cent by the end of June, fuelling fears of the impact on the cost of living. Earlier this month, the Bank of England raised its main interest rate from 0.5 per cent to 0.75 per cent. More

NatWest is to buy back about 5 per cent of its shares from the UK government for £1.2bn, reducing the Treasury’s voting rights in the lender to less than 50 per cent for the first time since 2008.The off-market purchase of almost 550mn shares, equivalent to 4.9 per cent of the stock in issue, means the Treasury will be left with a 48 per cent stake in NatWest. The UK lender will buy the shares at Friday’s closing price in London of 220.5p. The transaction is expected to be settled on Wednesday.Shares in the bank rose 1.7 per cent in morning trading on Monday. They have risen more than 18 per cent over the past year.The British government has owned the majority of NatWest, which used to be called Royal Bank of Scotland, since it was rescued at the height of the financial crisis with a £46bn bailout.It has repeatedly pushed back its deadline to offload the rest of its stake as political and economic uncertainty hit the bank’s share price. In 2021, the government announced it had appointed Morgan Stanley to manage the sale of its stake in NatWest.“What’s happened today is largely as expected, although the confirmation it’s happened is welcome,” said Ian Gordon, banking equity analyst at Investec, adding that it left the government on course to exit the bank in full by around the end of 2025.There was some debate within the market that the share buyback might have been delayed until the end of April, he said, following first-quarter results.RBS and the government have said in the past that it was inevitable the Treasury would suffer a loss as it reduced its stake because NatWest is a significantly smaller bank than it was before the financial crisis, and the purchase in 2008 was a rescue deal rather than an investment.When asked in February about what impact the end of government ownership would have on the bank, chief executive Alison Rose said that “practically it will make no difference”.A booming mortgage market and more than £1bn of loan impairments being written back helped the bank to a net profit of £2.95bn last year, a sharp reversal from a £753mn loss in 2020. It also announced an on market share buyback plan of £750mn. However, its fourth-quarter results were hurt by its trading business NatWest Markets, which made an operating loss of £302mn.The lender’s reputation took a hit in December when it became the first institution to plead guilty in a criminal prosecution under anti-money laundering laws. It was fined £264.8mn.Under the terms of a memorandum of understanding announced in April 2018, the share purchase means NatWest will pay £427mn into its main pension scheme. More

ORLANDO, Fla. (Reuters) – Hedge funds bet correctly on the U.S. yield curve flattening after the Fed kicked off its interest rate-raising cycle earlier this month, the first week in five that they have positioned for a shrinking gap between the two- and 10-year yields.Federal Reserve Chair Jerome Powell said last week that he pays more attention to the shorter end of the curve for potential signals about the health of the economy. But many market participants focus flattening of the interest rate curve between two- and 10-year yields, which has preceded all six recessions in the past 45 years. Some of Wall Street’s biggest banks are now predicting inversion later this year, but none are forecasting recession. Not yet, anyway.Futures market data for the week through March 22 showed that funds reduced their net short position in 10-year Treasuries and more than doubled the size of their net short position in the two-year space.The latest Commodity Futures Trading Commission report showed that funds increased their net short two-year Treasuries position by 27,015 contracts to 47,448, and cut their 10-year net short position by 57,163 contracts to 263,834.A short position is essentially a bet that an asset’s price will fall, and a long position is a bet it will rise. In bonds, yields rise when prices fall, and move lower when prices rise.A deeper dive into the data shows some potentially significant moves under way in the medium- to longer-term parts of the curve. Funds have cut their net short position in five-year Treasury futures by more than a third in the last three weeks. In the 10-year space, they have reduced their net short position by almost a third in just two weeks.This suggests a growing belief that longer-dated yields will soon peak, then fall. Funds’ long 10-year bets rose by around 119,000 contracts in the week, the biggest rise in five years and fifth-largest since the contract was launched 35 years ago. Graphic: CFTC 10-Year Treasuries – Long Positions – https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwqnkrvo/CFTC10sLONG.pngGraphic: 2s/10s Yield Curve – https://fingfx.thomsonreuters.com/gfx/mkt/egvbkbamnpq/CFTC2s10s.png INVERSION – WHEN, NOT IF?The curve between two- and 10-year yields flattened dramatically after the Fed’s lift-off on March 16. It fell to just 14 basis points on March 22, crushed by a wave of tough, inflation-busting rhetoric from Fed officials that pushed the two-year yield sharply higher.Several Wall Street big banks now expect 2s/10s inversion – from “modest” at Goldman to “large” at Bank of America (NYSE:BAC). Economists at BofA now expect a whopping 50 basis point inversion by the end of this year – a two-year yield of 3.00% and a 10-year yield of 2.50%. Graphic: Eurodollar 2023 ‘Terminal’ Rate – https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrqeadvm/ED24.png Many of them are now penciling in multiple rate increases of 50 basis points. Citi is gunning for four consecutive 50 bps hikes this year and a peak Fed funds range of 3.50%-3.75% next year, well into restrictive territory.”The 2s-10s curve is nearing inversion, and we think it will invert in the coming weeks (or days),” Morgan Stanley (NYSE:MS) strategists wrote at the weekend. Their base case scenario is a 40 bps inversion by the end of the year. These forecast changes are driven more by a projected higher path for the two-year yield than a lower path for the 10-year yield, as the Fed prepares to take the Fed funds rate beyond the neutral level estimated to be around 2.50%.The so-called terminal rate implied by Eurodollar futures, the anticipated peak in interest rates before they start to come down again, is now above 3%, and will be reached around June-September 2023.With more Fed policymakers coming out in favor of faster and more aggressive tightening if needed, CFTC data shows that funds expanded their net short three-month Eurodollar futures position to 2.657 million contracts, the largest since October 2018. The lower the price of these contracts goes, the higher the implied rate. Graphic: CFTC Eurodollar Futures – https://fingfx.thomsonreuters.com/gfx/mkt/klvykjdzkvg/CFTCED.jpg (The opinions expressed here are those of the author, a columnist for Reuters.) (By Jamie McGeever; Editing by Cynthia Osterman) More

Also in focus will be Europe’s dilemma whether or not to sanction Russian energy exports, potentially causing further price surges and economic difficulty.Here’s your week ahead in markets from Ira Iosebashvili in New York, Alun John in Hong Kong, Sujata Rao, Tommy Wilkes and Dhara Ranasinghe in London. 1/HAWKISH ENOUGH?Is the Federal Reserve’s aggressive trajectory for tightening monetary policy too hawkish, or not hawkish enough? Friday’s March U.S. jobs report might show. Economists polled by Reuters expect 450,000 new jobs were created, versus 678,000 in February.Hiring far above those estimates will strengthen the case for a 50 basis-point interest rate hike in May. After all, Fed Chairman Jerome Powell has signalled readiness to make a big move if needed.Despite that, the S&P 500 has managed to nearly halve its year-to-date losses. But watch the U.S. Treasury yield curve, which is getting close to inversion as investors fret about a Fed-induced recession. The bond market rarely gets it wrong. 2/ HARD TO SAY NO Targeting Russian energy, as the United States and Britain have done, is one of the most powerful levers the European Union could pull to punish Moscow for its invasion of Ukraine. But it remains a divisive choice for the bloc which relies on Russia for 40% of its gas and reeling from a surge in fuel prices. But as pressure grows to announce a ban, there’s been a new twist — President Vladimir Putin’s demand that “unfriendly” countries need to pay for gas in roubles is raising yet more concerns about Europe’s energy crunch.EU leaders could soon agree to buy gas jointly and secure additional U.S. gas supplies. But in the meantime, the debate is causing unease in all kinds of quarters. Oil producing group OPEC, for one, has warned the move could hurt consumers.3/ UP AND AWAY When first estimates of March euro zone inflation emerge on Friday, they may test the European Central Bank’s narrative that there’s no rush to raise interest rates.Inflation is already at a record high 5.9% and could hit 7% in the coming months. Given the ECB target of 2%, it’s unsurprising that some officials are urging one or even two rate moves this year.A strong inflation print will strengthen their case. But bond markets too suggest higher rates are coming, having priced five moves of 10 bps each by year-end. Germany’s two-year bond yield is up 30 bps in March, set for its biggest monthly rise since 2011. Having spent years deep in negative yield territory amid ECB bond buying to boost inflation, it is fast approaching 0%. That’s significant.4/ THE BEST (NYSE:BEST) AND WORSTThe first quarter of 2022 was one most investors would prefer to forget. Except of course those trading oil, metals or grains, who would have rejoiced in Brent crude soaring over 50%, and a 30% gain for the CRB commodities index. It was less rewarding on equities; with a 5% loss, the S&P 500 looks set to break a seven-quarter winning streak. Nasdaq euro zone stocks fared worse while Chinese markets had to cope with renewed COVID-linked lockdowns in many cities. Bond markets hit milestones unseen, in some cases, for decades. The 140 basis-point rise in two-year U.S. yields is the biggest since mid-1984; the German equivalent will post its largest quarterly rise since 2011.Unsurprising, given central bankers’ acknowledgement that inflation is not after all transitory and interest rates need to rise. Global inflation will hit 6.3% this quarter, the fastest rise in a quarter century, JPMorgan (NYSE:JPM) estimates. Finally, pity those who failed to exit Russia investments on time — with the country being ejected from equity and bond indexes, they will need to mark their holdings to zero. 5/STILL DIGGING China’s pledge not to roll out a property tax offers only short-term relief to developers, struggling with debt restructuring and access to finance. Evergrande, the poster child for the sector’s difficulties, has revealed new problems at a key subsidiary, and will not publish audited results by the March 31 deadline. Another embattled developer Kaisa said the same, though others such as China Vanke, Country Garden and Sunac China plan to publish annual results next week. Developers’ shares and Chinese high yield bonds remain under pressure. The property sector woes will remain on investors’ must-watch list until some real relief measures emerge. More

The writer is professor of economics and political science at the University of California, Berkeley The decision by the US and allies to freeze Russia’s foreign reserves has unleashed an intense debate about the future of the international monetary system. That debate is vigorous because the stakes are high and because it is at least 75 years, and the second world war, since similar decisions were taken — and after which the system was transformed. The debate is confusing, however, because it overlooks what has actually been happening to the global monetary system. Repeated references to “dollar dominance” notwithstanding, the share of dollars in global identified foreign exchange reserves has been trending downward for 20 years, from a bit over 70 per cent at the turn of the century to just 59 per cent in the third quarter of 2021.This trend is not a result of currency shifts or interest rate changes affecting the value of different reserve assets. It also does not reflect dollar aversion on the part of a handful of banks accumulating large reserve balances. Rather, it is the result of an effort by numerous central banks to diversify away from the US currency.Now comes the surprise. The diversification is not towards the euro, sterling and yen, the other longstanding constituents of the IMF’s special drawing rights basket, a multicurrency reserve asset. The collective reserve share of these currencies has remained substantially unchanged for two decades.Moreover, just a quarter of the shift has been into China’s renminbi, which was added to the SDR in 2016. Fully three-quarters has been into the currencies of smaller economies such as Canada, Australia, Sweden, South Korea and Singapore, as a working paper for the IMF that I co-authored shows. What explains these currencies’ rise? First, their markets have become more liquid. Historically, only a handful of countries possessed deep and liquid markets open to the rest of the world. Foreign exchange dealers were able to find counterparties in only a handful of currencies. In practice, this was mainly the dollar but also the euro, sterling and yen. These were the units used as vehicles for international transactions and that central banks therefore held as reserves.But the costs of transacting in subsidiary currencies have fallen with the advent of electronic trading platforms and new technologies for automated market-making and liquidity management. We see this in bid-ask spreads on subsidiary currencies, which are now as low — sometimes even lower — than on the euro, yen and pound.Second, central banks have become more active in chasing returns. Reserve portfolios are larger, raising the stakes.Third, and relatedly, low yields on the bonds of major reserve-issuing countries have intensified the search for alternatives. Non-traditional reserve currencies regularly offer attractive volatility adjusted returns relative to their traditional counterparts.Thus, we are already seeing movement towards a more multipolar international monetary system — just not the tripolar system dominated by the dollar, euro and renminbi anticipated by many observers.Recent events are likely to accelerate diversification. In Russia’s case, admittedly, all consequential reserve issuers except China have actively participated in the reserve freeze. Russia’s long-under way move into non-SDR reserve currencies has not therefore provided it with a haven. However, now that the sword of a reserve freeze has been unsheathed, one can also envisage a scenario in which the US freezes a country’s reserves but other governments don’t go along. In this case, additional reserve diversification by the target country could have insurance benefits.What about faster diversification towards the renminbi? Anyone contemplating moving reserves in that direction will have to consider the possibility that China could become subject to secondary sanctions. Moreover, Putin’s actions are a reminder that authoritarian strongmen can act capriciously when there are few domestic counterweights to restrain them. That President Xi Jinping has shown little inclination to interfere in the operations of the People’s Bank of China is no guarantee that he will maintain that stance in the future. It is no coincidence that every leading reserve-currency issuer in history has had a republican or democratic form of government, with checks on executive power.Russia’s reserve managers have no choice but to turn to the PBoC so long as it continues to grant them access. But for other central banks, an ironic result of the US decision to weaponise the dollar may actually be to slow international take-up of the renminbi. More

In a vegetable market in the Cairo district of Manial, mother-of-two Fatma Ibrahim is shocked by the rise of prices since the start of the Russia-Ukraine war and anxious about how she can afford to feed her family during the impending holy month of Ramadan. “I am barely managing,” said the jobless divorcee. “Cooking oil has increased so much and the simplest dish requires it. I no longer buy cauliflower or aubergine because frying them uses up so much oil. Also the price of flour shot up suddenly.” The daily Ramadan fasts are broken by nightly feasts and many buy in more food. “I don’t know how we will cope in Ramadan.”The increasing prices at the market stalls in Egypt epitomise the deep impact the war has had on the North African country’s economy. Soaring oil and commodity prices have hit one of the world’s biggest wheat importers hard, as has the loss of tourists from Russia and Ukraine. This comes on top of billions of dollars of outflows in recent months from Egyptian debt held by foreigners. Last week, Cairo asked the IMF for assistance, the third time in six years. Egypt is already one of the biggest borrowers from the fund after Argentina. The war in Ukraine had “heightened Egypt’s external vulnerabilities”, Fitch Ratings said this month. “Egypt will suffer reduced tourism inflows, higher food prices and greater financing challenges as a result of Russia’s invasion of Ukraine,” added the rating agency, saying that “the crisis aggravates Egypt’s vulnerability to outflows of non-resident investment from its local-currency bond market”.The outflows had been spurred by rising interest rates globally combined with concerns about Egypt’s economy in the absence of an IMF programme and perceptions that the currency was overvalued, Fitch said. To shore up its pressured finances, and restore confidence in its economy that is heavily reliant on “hot money”, or attracting foreigners into the short-term local debt market Egypt devalued its pound currency last week just before it announced it was seeking IMF support.Egypt is the world’s biggest wheat importer and its subsidised bread programme reaches 70mn people. © Nariman El-Mofty,/AP“Egypt has a structural dependence on hot money and is therefore highly exposed to investor sentiment,” said Farouk Soussa, economist at Goldman Sachs International. Some $15bn had been pulled out of Egypt since the end of January as a result of the war, he added. The Ukraine war has sparked huge increases in the prices of wheat, cooking oil and petroleum. Egypt is the world’s biggest wheat importer and its subsidised bread programme reaches 70mn people — or two-thirds of the population. Cheap bread has been seen by successive governments as important to stability in a country where more than half the population are considered poor. On top of that, the loss of visitors from Russia and Ukraine — the two biggest tourism markets — is a blow to a sector that had just started to recover from the pandemic.Occupancy in hotels in Red Sea resorts had plunged to 5 per cent, said Nader Henein, vice-president of Seti First Travel, a major travel company. “We were expecting Egypt to double the number of tourists we had last year to 7mn, and the Russians and Ukrainians would have been half of that,” he added. “Everything has stopped. It is a big disappointment. There has been growth in arrivals from Germany but they can never replace the Russians.”Resorting to the IMF should provide some respite, Soussa said, noting that because Egypt had exceeded its quota of borrowing rights from the lender, the fund would probably require it to secure co-financing from other sources. ADQ, an Abu Dhabi sovereign wealth fund, has been reported by Bloomberg to be discussing $2bn investments in some listed companies. Other Gulf states are said to be considering support for Egypt.Soussa said he expected the IMF to focus on maintaining a flexible foreign currency regime and the “role of the military and the state in the economy and creating a level playing field for competition”. Since Abdel Fattah al-Sisi, the president and former military chief came into office in 2014, the army has widened its footprint in the economy, some say, spooking the private sector which fears competition with the most influential institution in the country. As Ramadan approaches, police and army, a major food producer, have stationed trucks in many poor areas selling basic foods such as meat, rice, pasta and oil at reduced prices. “We are well-prepared [for Ramadan] and all goods can be found in the market,” Sisi said at a televised event last week. “The army has made available 2mn food boxes and is prepared to provide 3, or 4mn, without limits.” Turning to the defence minister, he instructed, “sell it for half its price”. The response came back: “Yes, sir.”Back in Manial, Shaaban Hussein, a coffee shop owner who has four children, said food prices were high before the war and increased further after the conflict. “I couldn’t pay the rent on the coffee shop because there have been so few customers,” he said. “How are they going to be able to buy drinks when everything has become so expensive?” More

For all the focus on how Russia’s economy is in trouble, isolated and battered by western sanctions, China, its most important ally, faces serious tremors as well. No other major country is showing deeper sinkholes of economic trouble.After building for months, financial stress emanating from the Chinese property sector has blown out to unprecedented levels in recent weeks, destabilising an already brittle economy and making it less likely that Beijing will aggressively support Russia’s invasion of Ukraine.Unsure whether the troubled property developers are just illiquid and temporarily short on cash, or insolvent and unlikely to survive, big Chinese lenders are wary of extending new loans. Finding it difficult to raise money at home, the developers have been forced to borrow abroad at exorbitant rates. The spread between high-yield bonds in the overseas Chinese market and government bonds is now at a staggering 3,000 basis points, a level last seen during in the 2008 financial crisis.Property is critical to growth in China. About 25 per cent of gross domestic product and 40 per cent of bank assets in China are tied to the property market, where estimates of the effective default rate on high-yield bonds are close to 25 per cent, a record high. Dependence on foreign capital is high, but in February foreigners sold off China’s local currency government bonds at an unprecedented pace, twice the previous monthly high.These uncertainties echo the doubts that haunted the US financial system in 2008, when lenders could not tell which big borrowers would live through the crisis and credit markets froze. Chinese policymakers seem aware that they cannot afford confrontations that further destabilise financial conditions.Liu He, the top economic adviser to Chinese president Xi Jinping, recently tried to calm the markets by addressing concerns about how the government is handling problems in the property sector, the regulation of big tech platforms, a surge in Covid-19 cases and more. His comments brought some relief to financial markets, but systemic risk in the property sector remains high.The fact that credit growth in China continues to be weak despite central bank efforts to stimulate the economy may be an early-stage sign of Japanification. With its rising debt, shrinking population and market turmoil, China looks increasingly like Japan did in the 1990s. That’s when Japan entered a deflationary trap, as lenders became reluctant to lend no matter how much liquidity the central bank pumped into the system.Total debt in China has tripled over the past three decades to nearly 300 per cent of GDP, the level hit by Japan around 1990, at the start of its so-called lost decades. China’s working age population started to contract in 2015, a step toward stagnation that Japan crossed in the mid-90s.Fewer workers mean slower growth. Looking at data from 200 countries going back six decades, my research found 38 cases of a country’s working-age population shrinking for a full decade. GDP growth in those countries averaged just 1.5 per cent and surpassed 6 per cent in only three cases. All three were small nations in special circumstances, such as recovering from a crisis.Strong economic growth is virtually unheard of when the working-age population is shrinking, which makes it highly unlikely Beijing can hit its growth target of close to 6 per cent, particularly when productivity is also declining.Chinese state capitalism has been a success when the state was in retreat, but now it is on the march. The government is posing aggressive new regulations on high-productivity sectors such as tech and taking draconian steps to control the pandemic. Beijing’s campaign to limit Covid-19 cases to zero shielded much of the population from infection, but also left them vulnerable to new variants. Now these variants are surging, triggering new lockdowns under the “zero-Covid” policy. Economic activity including factory output and retail sales looks set to contract this month and next.So the west faces a more vulnerable, and possibly less unified, eastern front in the new cold war than many global observers have accounted for. With an economy just one-tenth the size of China’s, Russia is in a state of financial peril without equal, largely cut off from the rest of the world. But to an extent that is widely under-appreciated, China faces perils too and risks great damage to its vulnerable economy if it does anything that cancels foreign capital. That means Beijing is likely to think twice before offering generous support to Russia or defying western sanctions against the war.The writer is chair of Rockefeller International More

The US has denied that it is seeking to overturn Vladimir Putin’s regime after Joe Biden appeared to call for the ousting of his Russian counterpart during his speech in Warsaw on Saturday, saying “For God’s sake, this man cannot remain in power”.“We do not have a strategy of regime change in Russia — or anywhere else,” said US secretary of state Antony Blinken the following morning, as European leaders stressed the importance of avoiding an escalation of geopolitical tensions. Blinken was in damage control mode after Biden’s increasingly vitriolic descriptions of Putin, which raise concerns that Washington is losing control of its message.Biden also warned transatlantic democracies to steel themselves for a “long fight ahead” to protect freedom in Europe during his speech in Poland. Blinken added that “the president, the White House, made the point last night that, quite simply, President Putin cannot be empowered to wage war or engage in aggression against Ukraine or anyone else”.In other developments:Military: Russia refocuses on the eastern Donbas region as its lack of manpower and tactics forced it into a stalemate.Russia: Sergei Shoigu, Russia’s longest-serving minister, reappeared in a video released on Saturday, adding to the mystery of his two-week absence.Energy: Ukraine president Volodymyr Zelensky urges energy-rich countries to increase production in order to replace Russian supply and prevent Vladimir Putin from “blackmailing” Europe. This follows his plea to fast-track EU membership for Ukraine.Peace talks: Vladimir Putin personally approved Roman Abramovich’s involvement in Russia’s peace talks with Ukraine. Refugees: The war has sparked the biggest influx of immigrants to Israel in decades. More than 6mn people have been displaced within Ukraine.

Are you personally affected by the war in Ukraine? We want to hear from you. Thanks for reading FirstFT Asia. Here’s the rest of today’s news — Sophia.Five more stories in the news1. The rise in Russian espionage is alarming Europe Dozens of Russian agents and diplomats have been expelled from eastern European countries this month, with dozens more still active across the continent. Russia’s covert operations had been expanding, leaving counter-espionage efforts to play catch-up with Moscow’s undercover activity.2. China points to ‘Indo-Pacific Nato’ to justify their support of Russia Chinese diplomats have gone on a rhetorical offensive, arguing that Joe Biden’s “free and open Indo-Pacific” strategy — which binds the US, Japan, Australia and India — is a threat to them. This could ultimately force China to decouple from the west and achieve self-sufficiency in everything from food to semiconductors. 3. Nuclear deal with Iran stalls over terrorist designation Tehran has demanded that Washington delists the Revolutionary Guards, Iran’s most powerful military force, from its designation as a terrorist organisation. After 12 months of indirect talks to secure an agreement, a senior US official warns that the deal is not necessarily inevitable.4. Chinese developers are locked out of the global debt market The crisis at Evergrande is bleeding more widely across the market, as soaring borrowing costs and a drought in issuance cause deals to grind to a standstill for Chinese property developers.5. North Korea claims its ‘monster missile’ was a success The country said its nuclear forces were ready to “thoroughly contain any dangerous [US] military attempts”, but some observers cast doubt on the North Korean version of events. NK Pro senior analyst Colin Zwirko points to a swath of visual evidence suggesting that the launch was not as successful as North Korea claims.The day aheadShanghai goes on lockdown A four-day lockdown of Shanghai’s financial district and nine other areas begins today, as the city attempts to rein in the latest Covid outbreak.Europe works on a plan for refugees EU interior ministers meet in Brussels today to discuss the refugee crisis resulting from the Ukraine invasion.Japan releases an economic relief plan Komeito party leader Natsuo Yamaguchi says the package will include proposals for an expanded gas subsidy and other steps to ease the pain of soaring costs. (Reuters) What else we’re readingRussia, Ukraine and Europe’s 200-year quest for peace As Russia’s invasion of Ukraine enters its second month, we find ourselves in a world many Europeans thought they had left forever — one of annexation and partition. What can today’s negotiators learn from centuries of statecraft? Rallying Chinese markets will not be a quick fix Although there was a positive response to the reassurances that Liu He, a top economic official, made last week indicating China would introduce market-friendly policies, there are several obstacles ahead. Alicia García-Herrero explains the thorniest issues with He’s pitch.Japanese broker scandal exposes trading floor bravado As the investigation into SMBC Nikko continues, prosecutors have amassed a deep archive of callous internal communications which, regardless of proving guilt, will sound damning when read aloud in court.Venture capitalists choose crypto deals over board seats Something unusual is happening in the freewheeling world of cryptocurrencies: prospective investors are not being offered company board seats as founders of digital asset groups aim to avoid oversight.Fertiliser inflation could spark global food supply crisis Until recently, Russia was the second largest foreign exporter of fertiliser to the US and lack of competition in the industry is one of many factors that have caused prices to more than double since last year.

© Matt Kenyon

TelevisionBridgerton, the steamy Shonda Rhimes-produced period drama, returned for its second series this weekend featuring a south Asian family at the heart of the storyline. “Making sure that [south Asian women with darker skin] were represented on screen authentically feels like something that we haven’t seen nearly enough of,” Rhimes said in pre-launch publicity for Netflix. Kate Finnigan explores how the beauty of the south Asian aesthetic is reflected in the show’s resplendent costuming.

Sisters Edwina (Charithra Chandran) and Kate Sharma (Simone Ashley) are the new stars of Bridgerton © Liam Daniel/Netflix More