Good morning and welcome back. In today’s newsletter:
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Big Tech debt spree raises fears of AI risks in US bond market
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US links security guarantees for Ukraine to ceding territory
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EU to announce ‘mother of all’ Indian trade deals
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How Nato is preparing for war in the Arctic
We begin in the US, where technology groups are on track to dominate borrowing in the bond market, in a shift that could expose some of the world’s safest securities to greater risk from the AI sector.
What to know: By 2030, half of the 10 largest borrowers in the US investment-grade corporate bond market will be so-called hyperscalers — companies such as Alphabet, Amazon and Meta that are building data centres — according to Apollo Global Management.
Why it matters: Until now, the major borrowers have mostly been banks and telecom companies, meaning that credit investors are largely insulated from shocks in the tech-dominated stock market.
Investors have grown concerned that the gap between runaway capital expenditure on AI and the returns it generates could amount to a bubble that hits equities and the credit market. Michelle Chan has more from New York.
Here’s what else we’re keeping tabs on today:
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Worldwide: International Holocaust Remembrance Day is commemorated.
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Iowa speech: President Donald Trump is scheduled to speak about the country’s economy and energy on the day the US formally withdraws from the Paris Climate Agreement for a second time.
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Results: Boeing, General Motors, LVMH and Northrop Grumman report earnings. See The Week Ahead for a fuller list.
Five more top stories
1. Exclusive: The Trump administration has indicated to Ukraine that US security guarantees are contingent on Kyiv first agreeing a peace deal that would likely involve ceding the Donbas region to Russia, according to eight people familiar with talks. Read the full story.
2. India and the EU are set to announce today what New Delhi has described as the “mother” of all its recent trade deals. The agreement caps nearly two decades of negotiations and is intended to reduce both parties’ reliance on the US and China.
3. France’s Pinault family has agreed to sell its entire €1.5bn stake in sportswear brand Puma to Chinese sporting equipment maker Anta Sports. Anta will pay €35 a share for the 29.06 per cent stake in Puma held by Artemis, the billionaire family’s investment vehicle. Read the full story.
4. Israel is preparing for talks with the Trump administration over a 10-year security deal, with the aim of extending US military support even as Israeli leaders prepare for a future without billions of dollars of American cash grants. Read for more details.
5. Trump has said he will increase tariffs on South Korea to 25 per cent in response to Seoul’s “slow pace” in passing the trade deal it struck with the US last year. The president’s abrupt raising of duties on a trading partner will rattle other foreign countries with similar agreements.
News in-depth
Russia controls about half of the Arctic’s landmass and waters, giving it the largest presence among the eight countries in the region. Nordic nations hope Trump’s fixation on Greenland will spur Nato to catch up with the years of Russian military build-up in the region.
We’re also reading . . .
Chart of the day
Wes Streeting has emerged as the strongest contender to challenge Prime Minister Sir Keir Starmer for the Labour leadership. But the UK health secretary will have some convincing to do to win over the rest of the party.
Take a break from the news . . .
Is marathon running safe? Medical experts spoke to HTSI about the pros and cons of pushing yourself to the brink.
