The Global Overview
Fraying Social Contracts in ASEAN
Border gunfire between Thailand and Cambodia has widened to three provinces; Bangkok says army-navy units repelled fresh attacks, bringing the death toll to 34 in 72 h (Bloomberg, Nikkei). Just south, ≈15 000 Malaysians marched in Kuala Lumpur demanding PM Anwar’s resignation over “broken reform vows” and subsidy cuts that lifted diesel prices 56 % in June (Bloomberg, Bernama). Both flashpoints reveal the same fault line: citizens balking as governments strain to finance expansive promises amid weaker growth.
Bond Math vs. Welfare Math
Ten-year US Treasury yields touched 4.35 %, a 3-month high, while UK gilts flirted with 4.7 % (FT, WSJ). For every 50-basis-point rise, London’s annual debt-service bill swells roughly £13 bn—money not spent on hospitals or tax cuts. The FT’s model shows G7 deficits averaging 6 % of GDP through 2026; unless spending is pared back or growth accelerates, higher coupons look baked in. Think of it as a household rolling credit-card debt into ever pricier loans.
Trump, Trade & 2026
The White House is pumping early cash into swing-district Republicans and arm-twisting primary challengers to stand down, aiming to save $150 m in campaign costs (Politico, Axios). Parallel talks with Ursula von der Leyen on a tariff-light US-EU deal could lower average goods duties from 4 % to 1 %, trimming input costs for European SMEs already battling energy bills (Politico, FT). But any pact hinges on a Congress Mr Trump still controls—linking foreign trade to domestic electoral engineering.
Entrepreneurship Lag
New UK company formations fell 8 % YoY in Q2 despite record venture dry powder, a signal that red tape and planning bottlenecks—not capital—are throttling risk-taking (FT, ONS). Classical-liberal take: pruning regulation and expanding skilled-migration visas would cost far less than another industrial policy binge and yield faster productivity gains.
Stay tuned for the next Gist—your edge in a shifting world.
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