Headlines

A major global central bank is set to wind up its massive bond-buying program. The last time that happened—the Federal Reserve’s 2013 taper—global markets convulsed for months, The Wall Street Journal reported. This time, in the case of the European Central Bank, markets are digesting the news just fine—for now. But the backdrop implies a tricky road ahead. ECB president Mario Draghi is expected to signal further trims to the central bank’s bond-buying program as soon as Thursday. His job of communicating the withdrawal of stimulus comes at a delicate moment.

Bowing to pressure from the European Central Bank and the European Union, Bulgaria will seek to join the bloc’s banking union and the precursor for euro-area membership simultaneously within the next year, its finance minister said. The government in the EU’s poorest member appeared to yield to recommendations from the European Central Bank and the European Commission, which have said Sofia needs to improve governance, the economy and banks, Bloomberg News reported. Finance Minister Vladislav Goranov had insisted earlier this month on joining the bank union only after accession to ERM-2.

Shareholders in Steinhoff on Wednesday sued Deloitte for damages in a Dutch court, accusing the auditor of failures in the accounting scandal that brought the South Africa-based global retailer to the brink of collapse, the Financial Times reported. VEB, the Dutch investor rights group, said it brought the lawsuit in the Rotterdam district court as Deloitte had “seriously failed in its statutory task as auditor” by giving an unqualified audit to Steinhoff before the owner of the UK’s Poundland and Mattress Firm in the US revealed a black hole of more than €5bn in its accounts.

Euro zone finance ministers should agree in principle on a backstop for the EU’s bank rescue fund in time for a summit at the end of June, their chairman Mario Centeno said on Monday. He said the idea to expand the role of the euro zone’s bailout fund known as the European Stability Mechanism, making it also a common backstop for the Single Resolution Fund for banks, had now wide-ranging support within his Eurogroup, Reuters reported.

British discount retailer Poundworld has gone into administration, putting 5,100 jobs at risk and becoming the latest victim of brutal trading conditions in the UK retail sector, Reuters reported. Business services firm Deloitte said on Monday it had been appointed as Poundworld’s administrator. Private equity group TPG Capital, Poundworld’s majority owner, put the discount retailer up for sale last month but has failed to find a buyer.

The surge in Chinese company bond defaults has overseas investors deciding they need to take a closer look, Bloomberg News reported. Edmund Goh, an Asia fixed-income investment manager at Aberdeen Standard Investments, says he’s planning to take more trips to China to get intelligence that’s hard to gain from afar. Investors can get to see among others, people who work in risk departments at banks, who can tell them how they’re classifying loans, he said. Or corporate treasury executives who may shed some light on their use of shadow banking financing.

Mexico’s credit risk is at the highest level since the days after Donald Trump’s inauguration. Five-year credit-default swaps that hedge against a drop in the value of Mexico’s sovereign debt have soared as the July 1 presidential election nears, Bloomberg News reported. Leftist Andres Manuel Lopez Obrador holds a commanding lead in the polls, and traders are concerned his victory could upend the economy just as the country is roiled by increasing trade tensions with the U.S. Other Mexican assets are also showing signs of stress as the election approaches.

French retailer Casino has announced a €1.5bn asset disposal plan to help reduce the debt pile of the group, which has come under mounting pressure in the debt markets in recent weeks. Casino said on Monday after market close that it has identified non-core assets, including real estate assets, which could be sold for an estimated €1.5bn. It has flagged half of the disposals for 2018, and the other half early next year, and expects the asset disposals to help reduce its net debt in France by around €1bn by the end of 2018, the Financial Times reported.

When the European Central Bank meets on Thursday, one issue will dominate — Italian political turmoil and what that may mean for quantitative easing, the Financial Times reported in a commentary. The ECB’s plan is for its asset purchase programme to run until at least September. Mario Draghi, its president, is under pressure to provide some guidance as to whether September is a hard stop or whether purchases will continue until the end of the year or even further. There is no doubt that the eurozone economy still requires very low interest rates.

British and European airline regulators should be allowed to begin technical planning for Brexit that is kept separate from political discussions, aerospace trade bodies told the European Union's lead Brexit negotiator in a letter, the International New York Times reported on a Reuters story. Aviation is one sector that could be most severely impacted by Brexit, as there is no default fallback option for the industry if there is no agreement on future relations after Britain leaves the EU in March 2019.