Sales of risky European corporate debt surge to €23bn in June

Today’s agenda: Trump sours on Japan deal; attacks on oil tankers; Republicans’ “big, beautiful” curse; Labour rebellion; and Michael Strain on Zohran Mamdani and billionaires

Good morning. Sales of risky European corporate debt surged to about €23bn last month according to JPMorgan data, their highest ever level.

Why is this happening? High-yield, or junk-rated, companies are benefiting from a fall in borrowing costs due to greater demand from investors, taking advantage of a capital flight out of American markets. Yields move inversely to prices. Many investors are shifting allocations away from the US due to President Donald Trump’s erratic trade policy and rising government debt. Despite a strong rebound in the US stock market in the second quarter, a continued move away from dollar bonds has driven the currency to its weakest start to the year.

What this means: Even companies that previously struggled to tap the bond market now have access, given the “massive amount of cash to be invested”, one JPMorgan analyst said. Issuers with troubled pasts, or those offering complex and subordinated instruments such as payment-in-kind bonds — where interest can be rolled up into the principal to be repaid on maturity — have also been eagerly welcomed by investors. “Managers are desperate to invest,” said one leveraged finance banker.

Here’s what else we’re keeping tabs on today:

• Economic data: The EU publishes labour figures for May.

• China-EU ties: Chinese foreign minister Wang Yi meets European Council president António Costa in Brussels.

• Football: The Euro 2025 women’s championship kicks off with Iceland playing Finland in Thun, Switzerland.

Five more top stories

1. Trump has threatened to increase levies on Japan and impose new ones on countries that fail to agree a trade deal by next Wednesday, when his “reciprocal” tariffs are set to resume. Singling out the US’s Asian ally, Trump said: “I’m not sure we’re going to make a deal. I doubt it.”

• EU trade: European capitals have hardened their position, insisting the US reduces its tariffs on the bloc immediately as part of any first-stage agreement.

2. Deutsche Bank has laid out a steeper than expected capital hit from Basel IV rules that change how banks calculate risk. Under the new framework, which will be fully implemented by 2033, the German lender’s risk-weighted assets could increase by a third. Read the full story.

• Wall Street: Investors reaped the rewards of looser bank supervision as the biggest US banks announced a flood of shareholder payouts yesterday.

• Filling the SVB gap: A group of tech billionaires including Peter Thiel are backing the launch of a new lender that intends to serve start-ups.

3. Exclusive: A series of mysterious limpet mine attacks on oil tankers has shaken the shipping world, prompting speculation that the explosions were part of a state-backed sabotage campaign. All the vessels called at Russian ports within weeks of the attacks, prompting some security experts to suggest that Ukraine had a hand in the explosions.

4. Exclusive: The EU is blocking Britain’s attempts to join a pan-European trading area, according to officials on both sides. The UK announced it was considering whether to join the Pan-Euro-Mediterranean convention as part of its new trade strategy published last week, arguing it could help boost the country’s flagging goods exports.

5. Exclusive: Matthew Freud is looking at options to sell his eponymous PR consultancy after 40 years as one of London’s top spin-doctors. People with knowledge of the details said Freud, whose clients have included Sir Jony Ive and Sir Lewis Hamilton, has hired boutique investment bank Robey Warshaw to kick off a process to find a buyer.

New in-depth

Trump has narrowly passed his “big, beautiful bill” through the US Senate. But the legislation still faces hurdles, including the House, where several of his fellow Republicans have threatened to vote against it. But even if the president is able to get them in line, he faces a big task in defending the legislation before an American public that already seems to be souring on it.

We’re also reading . . . 

• Qantas: The Australian airline is investigating whether a hacking group that targeted Marks and Spencer was behind a breach affecting 6mn customers.

• Labour rebels: Sir Keir Starmer’s plans to save £5bn now lie in tatters after the prime minister was forced to water down his flagship welfare bill.

• Zohran Mamdani: The democratic socialist running to be New York City’s mayor is wrong — of course billionaires should exist, writes the American Enterprise Institute’s Michael Strain.

• NHS: Britons are growing less fond of their troubled healthcare system. Will Labour’s 10-year plan change their minds?

Join Stephen Bush, Miranda Green and Robert Shrimsley tomorrow for a live Q&A on Labour’s next moves after a turbulent 12 months. Submit your questions here.

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Drinking has become more prevalent among Gen Z as baby boomers cut back their alcohol consumption, according to an extensive study that challenges the narrative that abstinence among young people is driving the industry’s decline.

Take a break from the news

Whether you’re after a long, mellow session of sunlit viewing or seeking the nearest venue to catch a nail-biting tie-break, here are some of the best places to watch Wimbledon in London.