The return of CDS, US rates watch and saving the Great Barrier Reef

The daily briefing “FirstFT” from the Financial Times.

Wall Street is trying to build up “single-name” credit default swaps – derivatives contracts that track the risk of default by a company that sells bonds. The derivative was widely blamed for fanning the financial crisis and has since seen a large decline in volumes traded.

Less liquid debt markets have made it difficult for large money managers to buy a particular bond but a credit derivative contract provides an alternative method for gaining exposure to a particular company without having to own the bond.

Regulators had sought to clamp down on the credit derivatives market after the crisis but banks and large investors are looking to revive it in an effort to limit bond-market volatility when interest rates rise.(FT)

In the news

Chinese corporate “spy ring” arrests US authorities ratcheted up pressure on China’s alleged efforts to spy on US companies and steal their trade secrets. Six Chinese nationals have been charged with economic espionage, amid accusations they stole sensitive US technology to help Chinese universities and government-controlled companies. The defendants include three Tianjin University professors – one was arrested on Saturday when he arrived in Los Angeles to speak at a conference, the other five remain in China. (FT)

HSBC to charge for deposits The bank said it would introduce fees for clients this summer on deposits in Swiss francs, Danish krone and Swedish krona – all currencies of countries withnegative interest rates – at its UK, German and Hong Kong operations. HSBC is one of the biggest global banks to make the move, which underlines the extraordinary measures banks are taking to protect profit margins amid record low rates. (FT)

Biggest ever car recall Takata, the Japanese supplier, announced that millions more US vehicles have been affected by its faulty airbags, which can explode violently and have been linked to six deaths and 100 injuries. It will recall up to 34m vehicles from manufacturers including Honda, Fiat Chrysler, Ford, General Motors, Toyota and BMW. (FT)

LA raises minimum wage The second-largest US city by population will increase guaranteed pay for workers to $15 an hour by 2020. With income inequality securing growing political attention and Republicans reluctant to act, campaigners in the US have successfully turned to cities and states to push for a rise in minimum wages. (FT)

Pakistan’s fake diplomas Pakistani investigators raided the offices of Axact, a software group in Karachi that has come under scrutiny for making tens of millions of dollars through a network of fake online schools. The company has been linked to hundreds of websites, many of which purport to be online universities and schools in the US. (NYT)

It’s a big day for

Rate watchers The US Federal Reserve will release minutes from its April 28-29 meeting. Investors will be reading the tea leaves to get a better sense – amid middling data – of when the central bank might begin raising interest rates. (Bloomberg)

Big banks The $6bn settlement between US prosecutors and Barclays, Citigroup, JPMorgan Chase, UBS and the Royal Bank of Scotland over allegations they rigged foreign exchange benchmarks could be announced today. Here are 10 things you need to know. (FT)

David Letterman The comedian signs off after 33 years as a late-night talk show host. He and his staff began as upstarts and outsiders, but leave behind an institution of American television. (NYT, AV Club)

Food for thought

Bond bulls beat a retreat Martin Wolf argues that the “long fall and recent collapse in nominal and real yields on safe securities should now be at an end”. But a swift rebound from record lows is both unlikely and, he says, unwanted. (FT)

Knausgaard on Breivik The Norwegian literary sensation delves into the mind of the mass killer. “Like many Norwegians, I cried when I learned what had happened, and in the days following. The assault penetrated every defence, for the deaths we were used to seeing in the media had always happened in other places, in foreign cities and countries, but this had happened in our own world, in the midst of things so well known and familiar that we couldn’t see it coming. It had happened at home.” (New Yorker)

The Man Booker International Laszlo Kraznahorkai, the Hungarian writer known for his dense novels and extremely long sentences, has won the GBP60,000 award and ended a run of three wins by North American writers. (FT)

Video of the day

Saving the Great Barrier Reef One of the world’s most spectacular natural wonders is slowly disappearing. With the Australian government backing coal industry development on the Queensland coast, the reef’s future remains in question. (FT)

This article is published in collaboration with The Financial Times. Publication does not imply endorsement of views by the World Economic Forum.

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Author: FirstFT is the Financial Times’ editors curated free daily email of the top global stories from the FT and the best of the rest of the web.

Image: A street sign for Wall Street hangs in front of the New York Stock Exchange. REUTERS/Lucas Jackson.