Headlines

The Bank of Canada ended its bond-buying stimulus program and accelerated the potential timing of future interest rate increases amid worries that supply disruptions are driving up inflation, Bloomberg News reported. In a statement Wednesday, policymakers led by Governor Tiff Macklem announced they would stop growing holdings of Canadian government bonds, ending a quantitative easing program that has poured hundreds of billions into the financial system since the start of the Covid-19 pandemic.

Brazil’s central bank is poised to deliver its biggest interest rate hike in nearly two decades as plans for greater public spending risk jeopardizing efforts to bring inflation down to target, Bloomberg News reported. Most economists agree on the need to step up an already aggressive monetary tightening campaign, but are divided over how dramatic the increase will be. The majority of the 49 analysts surveyed by Bloomberg expect the benchmark Selic to jump by 150 basis points to 7.75%.

France announced Wednesday that it will bar British fishing boats from some French ports starting next week if no deal is reached with the U.K. in a dispute over fishing licenses — and suggested it may restrict energy supplies to the Channel Islands as well, the Associated Press reported. Since the U.K. left the economic orbit of the European Union at the start of the year, relations between London and Paris have become increasingly frayed. France vehemently protested the decision last month by the U.K.

Chinese regulators have told developers they need to meet all their debt obligations including offshore bond payments after an unexpected default cast doubt on the integrity of the market, Bloomberg News reported. Officials from the National Development and Reform Commission and the State Administration of Foreign Exchange told developers at a meeting in Beijing on Tuesday that they must make payments on time if possible. Any developer that can’t meet its debt obligations must inform regulators immediately.

The European Union’s top court on Wednesday handed down a record daily fine to Poland for failing to comply with its decisions, the latest episode in an escalating fight between Brussels and Warsaw over judicial independence, the Wall Street Journal reported. The European Court of Justice ordered Poland to pay the EU’s executive body, the European Commission, one million euros, equivalent to $1.16 million, a day until the country complies with an interim order in July to scrap a disciplinary tribunal whose powers include the ability to fine or demote judges.

The British government said on Tuesday that it would introduce legislation enabling a form of financing for nuclear power stations that it hopes will attract investors willing to put up billions of pounds to build new facilities, the New York Times reported. The government’s move, which would require consumers to help pay for these plants as they are being built, is expected to provide a green light for a long-delayed new nuclear station northeast of London, estimated to cost £20 billion ($27.5 billion).

Saudi Arabia reached an agreement with one of the world’s biggest bond clearing systems to settle transactions in its debt market, Bloomberg News reported. The deal between the kingdom’s Securities Depository Center Company, known as Edaa, and Brussels-based Euroclear Bank will give foreign investors access to the sukuk and bond market within the Saudi Exchange. Under the terms of an agreement signed at the Future Investment Initiative conference in Riyadh, the link is expected to become operational in March 2022, according to a statement on Wednesday.

Modern Land defaulted on a bond payment, the latest Chinese property developer to do so, adding to worries about the wider impact of the debt crisis at behemoth China Evergrande Group, and weighing on shares in the sector, Reuters reported. Modern Land (China) Co Ltd said in a filing on Tuesday that it had not repaid principal and interest on its 12.85% senior notes that matured on Monday due to "unexpected liquidity issues". The bond has outstanding principal of $250 million.

Luckin Coffee Inc. reached a $175 million settlement of shareholder class-action claims that the Chinese rival to Starbucks fraudulently inflated its share price by falsifying revenue, Reuters reported. Lawyers for the shareholders called the all-cash settlement, filed on Monday night, an “excellent result,” citing Luckin’s liquidation proceeding in the Cayman Islands and its related filing for protection under the U.S. Bankruptcy Code.

The Bank of Canada will continue pulling back its support for the economy at a policy decision this week, paving the way for the start of interest rate increases next year amid inflation worries, Bloomberg News reported. Governor Tiff Macklem is expected to reduce weekly government bond purchases by one half on Wednesday to C$1 billion ($809 million). That will mark the fourth time over the past 12 months the central bank has rolled back a program that has poured hundreds of billions into the financial system since the start of the Covid-19 pandemic.