Key Takeaway: Moody's downgraded Southern Water to junk status , citing financial and operational underperformance, compounding the broader issues facing the UK water sector. Southern Water Ltd’s credit rating was downgraded to junk by Moody’s , with a warning of potential further cuts due to its weak performance history and financial challenges. This downgrade impacts the company’s ability to raise the £4 billion in new debt and £650 million in equity required for its capital plans. The UK water industry is facing heightened scrutiny due to concerns over chronic leaks, sewage spills, and high-interest rates. Southern Water, which supplies over two million people in England, could face severe penalties from the regulator Ofwat , which may limit funds for essential upgrades. Following the downgrade, Southern Water’s 2026 bonds dropped 2.7 pence to around 85 pence on the pound. Despite the rating cut, Southern Water assured customers that services would continue unaffected, hig
US Bond Yields and Dollar Rise as Investors Weigh Trump’s Inflationary Policies; Bitcoin Hits $90,000
Key Takeaway: Longer-term US bond yields rose alongside the dollar, with investors bracing for inflationary pressures from Trump’s policy agenda, while Bitcoin soared above $90,000 amid optimism for the cryptocurrency market.
Long-term US bond yields and the dollar climbed on Thursday as investors bet that Trump’s plans for tax cuts and tariffs could fuel inflation, potentially keeping interest rates elevated for longer. The 10-year Treasury yield reached 4.483%, its highest since July, while the 30-year yield hovered near a five-month peak. Meanwhile, Bitcoin surged to $90,654, boosted by views that Trump’s administration could favor cryptocurrencies.
Despite a recent US inflation report aligning with expectations, which strengthened bets on a December Fed rate cut, the market outlook for 2025 is clouded by Trump's election, with concerns that increased US deficits and sticky inflation could curb future rate cuts. The dollar index reached a one-year high of 106.77, with the greenback pushing the euro to a one-year low and surpassing ¥156 against the yen.
Stock Market Reactions:
- European Shares: The Euro STOXX 50 rose 0.6%, buoyed by strong earnings reports from companies like Deutsche Telekom.
- Asian Shares: Asia saw mixed performance, with China’s CSI300 blue-chip index falling 1.7% due to lackluster response to Beijing’s economic support measures. Japan’s Nikkei dropped 0.5%.
Commodities:
Oil prices were little changed, with Brent crude at $72.30 and WTI at $68.43. Gold fell 0.7% to $2,555.99 an ounce as investors leaned toward the dollar amid inflation concerns.
Overall, the market is balancing hopes for pro-business policies with caution over Trump’s more hawkish stance on China and inflation-driven uncertainty for the Fed's future monetary policy.
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