Key events
Burnham backtracks on spending housing fund only on building social homes
Over here, Andy Burnham has backtracked on his proposal to rip up the government’s housing plans and boost social home building.
Ministers laid out plans on Monday to spend an initial £10bn from the 10-year Affordable Homes Programme on a mix of subsidised housing types in England, in line with the Starmer government’s policy.
Burnham previously called for the programme to be spent entirely on social homes, which are more heavily subsidised and therefore more affordable than other types of government-funded housing.
He said when launching his campaign to become MP for Makerfield:
There’s £39bn allocated over a 10-year period … I’m saying that should be dedicated to council homes. Let’s not be coy any more … I’m saying council homes because control matters.
US Treasury’s Scott Bessent ‘making mistake’ interfering with bond markets, former mentor warns
Graeme Wearden
Scott Bessent’s attempt to calm the bond markets and push down America’s cost of borrowing have attracted a rebuke from the US Treasury secretary’s former mentor.
Billionaire investor Stanley Druckenmiller, who worked with Bessent at George Soros’s fund management firm in the 1990s, has warned that his former pupil is courting danger by trying to suppress US bond yields.
Druckenmiller, writing in the Wall Street Journal, argued that the US should “Let the bond market speak”, rather than expand its bond purchases in an effort to push up prices, and lower borrowing costs.
Governments defending prices against fundamentals always lose. The only variable is how much they spend before conceding.
Druckenmiller argues that Washington should heed the rise in borrowing costs – measured by bond yields – and take steps to cut the budget deficit, rather than interfering in the market to push yields down again. He wrote:
The long-term Treasury yield is the most important price in the world. It is also the only fiscal disciplinarian the US has left. Neither party will run on entitlement reform. Both have spent the past decade expanding commitments while ignoring arithmetic.
Druckenmiller’s intervention comes after Bessent decided to least double the maximum size of the Treasury’s buyback operations, from $2bn (£1.5bn) to $4bn. That move briefly led to a drop in US long-term bond yields, but this quickly reversed.
Druckenmiller said:
The market’s verdict was swift and correct: This wasn’t liquidity management, it was price management – and a mistake far larger than $4bn suggests.
Ipek Ozkardeskaya, senior analyst at Swissquote, has sent us her thoughts on gold.
Renewed appetite for gold despite elevated long-term US yields is striking and sends a clear message: investors are moving back to the precious metal as:
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A hedge against unclear US fiscal plans and the lack of conviction in the US administration’s capacity to rein in exploding debt when military expenses are adding to already heavy bills.
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A hedge against inflation, amid questions over the Fed’s willingness, or ability (!), to fight inflation independently.
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A hedge against a potential rout across global risk assets on worries about high valuations, massive AI spending and the growing financing web around the companies involved in building the AI ecosystem – the circularity.
Last Friday, gold cleared an important technical resistance: the $4,530 an ounce level, she noted. The precious metal flirted with the $4,00 offers this morning in Asia before giving back part of the gains. Ozkardeskaya added:
The question is: will gold gather enough momentum to return sustainably above the $5,000 mark?
Possibly, yes. The broad de-dollarization trade that’s quietly building in the background, justified by global institutions’ efforts to diversify away from US Treasuries and toward gold, remains supportive of gold in the longer run. In the shorter run, overbought conditions could lead to downside corrections, giving dip-buying opportunities to long-term bulls.
And zooming out, the present macroeconomic setup – with rising inflation expectations – increases appetite for hard commodities, and alternative assets and hard commodities are also having a moment.
Among them, Bitcoin has rallied strongly since last week, while copper – one of my favourite industrial metals in the AI age – is also pushing higher, with the positive momentum backed by strong backwardation – meaning the spot price is higher than futures prices – which in turn is backed by strong fundamentals: copper supply and inventories struggle to keep pace with strong demand growth driven by electrification and the AI buildout, and the widening demand/supply gap makes traders willing to pay a large premium for copper now, rather than copper delivered later.
Introduction: Gold hits highest level in three months as traders worry about US inflation and bond market jitters
Good morning, and welcome to our rolling coverage of the global economy, the financial markets, the eurozone and business.
Gold has climbed further, hitting its highest level since mid-May, as traders and investors worry about the outlook for US inflation and bond market jitters.
Spot gold hit almost $4,700 an ounce earlier and is now trading at $4,649 an ounce.
Prices jumped last week after the US Treasury Department said it would double its debt purchases of longer-dated bonds, as it scrambled to calm the bond market after a sharp rise in yields. The focus is now on US inflation data and a speech by Federal Reserve chair Kevin Warsh on Friday for clues on interest rate hikes and the bond market.
Cryptocurrencies are also rallying. Bitcoin rose through $80,000 for the first time since May, rising to $80,453 this morning, up more than a quarter in the past week. However the cryptocurrency remains well below the all-time peak of $126,000 reached last year. Ether also climbed, to $2,503.
Meanwhile in the Middle East, just two commodity vessels transited the strait of Hormuz on Monday, the lowest daily tally since early May, with both entering the Gulf, according to shipping data.
The figure was also well below the 10-day average of 14, Reuters reported. However, some ships switch off their navigation transponders on their way through so the real figure could be higher.
Iran said on Monday it had backlisted 45 tankers for violating its rules on passage through the key waterway and threatened action such as fines against vessels engaging in ship to ship transfers with them.
Oil and stock markets have shrugged off the threat of severe sanctions against Iran or any entity maintaining economic ties with Iran from the US, after nearly six months of war.
Brent crude, the global benchmark, has fallen further this morning to $91.41 a barrel, down 76 cents or 0.8%.
Asian stock markets are mostly higher, with Japan’s Nikkei up 0.5% and South Korea’s Kospi rising 0.7% while Hong Kong’s Hang Seng dipped 0.15%.
Launching what he called Operation Economic Outcast on Monday, the US treasury secretary, Scott Bessent, called it an unprecedented campaign and compared it with the D-day Normandy landings, a turning point in the second world war.
However, when asked by a reporter why the US wasn’t imposing immediate sanctions, Bessent replied:
Well, we are giving everyone the opportunity to remedy bad behaviour. Why would I want to blow up the global financial system? We believe that it is important to level set and give people a cure period, but they should know that that will move very quickly and that we are serious.
It is unclear how far the Trump administration is prepared to go in confronting China, Iran’s biggest trading partner. Tehran vowed retaliation against any country that took part in the US-led isolation campaign.
Germany, Europe’s biggest economy, grew 0.3% in the second quarter compared with the previous quarter, driven by exports, according to official figures. That’s slightly higher than a preliminary estimate of 0.2%.
Ruth Brand, president of the Federal Statistical Office, said:
The German economy is maintaining the growth momentum seen at the start of the year. As in the first quarter, growth was primarily driven by the positive development of exports.
Total exports of goods and services rose 2%. And wholesale and retail trade performed much better than expected, while investment dipped 0.2%.
The Agenda
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9am BST: Germany Ifo business confidence for August
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10am BST: UK gilt auction of 2033 bonds
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2pm BST: US S&P/Case-Shiller 20-City Home Price Index
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3pm BST: US Conference Board consumer confidence for August
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3pm BST: US New home sales for July
