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The pound plumbed new depths against the dollar and investors rushed for the perceived havens of gold and government bonds as financial turmoil intensified in the wake of the UK’s Brexit vote, with sterling falling below $1.28 in early Asian trading on Wednesday — its lowest in more than 31 years.
Investors, spooked by a number of UK property funds halting redemptions, switched to risk-off mode and sent yields on government bonds tumbling to new lows. Jitters reverberated around the globe: the 10-year Treasury yield fell into uncharted territory below 1.36 per cent on Tuesday while yields on the entire suite of Swiss government bonds out to 50 years are now in negative territory.
Meanwhile, the UK revisited the controversy surrounding the Iraq war with the release of the long-awaited Chilcot report. After seven years of investigation and testimony from more than 150 witnesses, Sir John Chilcot found that the UK government “failed to achieve its stated objectives” in the conflict and joined the invasion before the “peaceful options of disarmament had been exhausted”. He also found that intelligence about the presence of weapons of mass destruction in Iraq — one of the pretexts of going to war — was presented with a “certainty that was not justified”.
The report should give beleaguered labour leader Jeremy Corbyn a boost. He spoke out against the conflict in 2003, warning that it could lead to long-term instability. He has signalled that he wants Tony Blair, who was prime minister at the time, to be prosecuted for war crimes at the International Criminal Court.
In the news
Cloud over Clinton emails The rebuke by FBI director James B. Comey over Hillary Clinton’s use of a private email server will affect her candidacy and, if she wins, could cast a shadow over her presidency. The bureau did not press charges but found that Mrs Clinton was “extremely careless” in handling secret information as secretary of state. (WaPo)
Probe poses risks for Goldman Sachs Department of Justice officials are investigating whether the Wall Street bank violated the Bank Secrecy Act in its handling of the proceeds of securities offerings for 1Malaysia Development Berhad, a state investment fund embroiled in a long-running scandal over claims of misappropriation. (FT)
New deal for Americans in Japan Tokyo and Washington have agreed to review controversial special legal rights granted to US civilians employed by the American military in Japan. Public anger has been rising in Japan over what many see as unfair legal protection given to US citizens. (NAR, NYT)
German carmakers under investigation Six of Germany’s largest carmakers and parts suppliers were raided by the country’s cartel authority on Tuesday over suspicions they had colluded when buying steel. The raids follow a number of probes in recent years on car parts ranging from airbags to lighting systems. (FT)
AC Milan moves to new ownership The club is set to be the latest top-tier European football team to move into Chinese ownership after long-time owner Silvio Berlusconi said he had sold it. The sale comes as Chinese investment in European football has grown rapidly. (FT)
It’s a big day for
The Fed On Wednesday investors will scrutinise minutes of the Federal Reserve’s June meeting as they seek to determine the timing of the next rate rise.
Food for thought
How Europe should respond to Brexit Is the best way to preserve the bloc to make it a prison, rather than a desirable place of refuge? The pending divorce poses a huge challenge for the UK but it also brings challenges for the EU, writes Martin Wolf. To thrive, perhaps even to survive, the EU must change. (FT)
Isis victims sidelined Muslims around the world are asking why there has been no global outrage over the spate of terrorist attacks in recent days. Jihadis have killed more than 350 people in Istanbul, Dhaka and Baghdad, but there has been no worldwide reaction like after the attacks in Paris and Brussels, say Middle Easterners. (NYT)
Japan chooses cannibalism over investment An extensive critique of the Japanese economy by the Daiwa Institute of Research last week cited weak corporate investment as one of the three main reasons that Abenomics and the Bank of Japan’s negative interest rate policy have yet to refire the growth engines. (FT)
Cancer: it is not uncontrollable Many people think that preventing cancer is outside of their control — that the disease occurs much more because of “bad luck” than anything else. This is not necessarily the case. Researchers believe that less than 30 per cent of cases were because of such “bad luck”. The rest were as a result of things you can change. (NYT)
Would a work-free world be so bad? The benefits of work are overrated. In its absence, a society designed with other ends in mind could yield strikingly different results for the future of labour and leisure, argues Ilana Strauss. (The Atlantic)
O Canada It is the story of government over-reach at the . . . lowest levels. An enterprising scheme to provide the citizens of Ottawa with ice-cold refreshment has been shut down by federal authorities. The lemonade stand — run by the 7- and 5-year-old Andrews sisters — didn’t have the appropriate permit, they said. No exceptions. (The Guardian)
Video of the day
EU models for a post-Brexit UK Now that the UK has chosen to trade in its EU membership, which new model of trade relations with the rest of Europe does it want instead? The FT’s Martin Sandbu takes you on a tour of the post-Brexit showroom. (FT)