Global growth slows as shocks spread

Global growth is expected to slow in 2026 as geopolitical tensions, energy disruption, trade uncertainty and financial pressure test an economy that entered the year with more resilience than many expected, according to UN Trade and Development (UNCTAD).

The organisation’s ‘Trade and Development Foresights 2026’ report forecasts global growth of 2.6% this year, down from 2.9% in 2025. It warns that the world economy is moving from an initial phase of supply disruption and inflation into a more fragile period in which prolonged uncertainty could trigger shortages and wider financial stress.

Trade has so far remained relatively resilient, supported by industrial production in developing economies and strong investment linked to artificial intelligence. Yet that headline resilience masks a narrower base of momentum.

Global merchandise trade grew by 4.7% in 2025, but UNCTAD expects the pace to slow to between 1.5% and 2.5% in 2026 as geopolitical tensions affect supply chains, shipping routes and investment decisions. Much of the strength seen in early 2026 was concentrated in AI-related products, including semiconductors, servers and data-processing equipment.

Outside those sectors, trade growth has been more modest, particularly in traditional industries and commodity-linked sectors. That matters for companies whose revenues, inventory planning and working capital cycles depend less on high-growth technology supply chains and more on broader industrial demand.

Developing economies remain a central concern. UNCTAD says many are facing rising fuel, food and fertiliser bills at the same time as currency pressure, tighter financing conditions and weaker investor sentiment. Those economies played a growing role in global trade and growth in 2025, but prolonged instability could now undermine that momentum.

For corporate finance and treasury teams, the report points to a wider risk environment than a conventional trade slowdown. Higher energy and transport costs can feed through into supplier pricing and margins, while weaker investor sentiment and capital outflow risks can tighten financing conditions in emerging markets. Currency pressure also raises hedging and cash repatriation challenges for multinationals operating across developing economies.

Food security is another area moving into the financial risk column. UNCTAD says higher energy prices are lifting fertiliser costs and adding to food inflation pressures in developing economies. Volatility and tighter financing conditions are also exposing vulnerabilities across global food trading systems.

The report warns that financial stress among major food trading firms could amplify food security risks if disruptions persist. For governments already facing higher debt-servicing costs and limited fiscal space, that makes food security a financial stability concern as well as a question of availability and prices.

UNCTAD says resilience will depend on investment and transition. Renewable energy is becoming more cost-competitive and strategically important as economies seek to reduce exposure to fossil fuel shocks. Investment, however, remains uneven, limiting the ability of many developing economies to benefit.

The report calls for stronger international cooperation, more predictable trade conditions, greater financial safeguards for developing economies and faster investment in affordable clean energy. Its central message is that the global economy is still expanding, but the buffers around trade, food and finance are becoming thinner.

 

Australian shares rise on US-Iran deal hopes

Australian shares started the week higher as hopes of a possible US-Iran deal lifted investor sentiment and pushed oil prices below US$95/barrel. The S&P/ASX 200 rose 35 points on Monday, or 0.4%, to 8,692. The broader All Ordinaries gained 38.2 points, or 0.43%, to 8,915.4.

The move reflected a more constructive tone across risk assets as investors assessed the prospect of easing tensions in the Middle East. Lower oil prices helped improve sentiment, although the market reaction was uneven across sectors.

Miners led the local advance, with the gold sub-index rallying by almost 5%. Six of the 11 local sectors ended the session higher, suggesting the improvement in risk appetite was broad enough to support the market overall, even as energy names came under pressure.

Brent crude fell below US$94.50/barrel as traders responded to hopes that a deal could reduce the risk of further disruption to energy supply. The decline weighed on energy stocks, including Woodside, Santos and refinery operators Ampol and Viva.

The session underlines how quickly geopolitical developments are feeding through into commodity prices, equity markets and currencies. A lower oil price can ease inflation and cost concerns for energy-consuming businesses, but it also creates pressure for producers and related sectors.

The Australian dollar also strengthened as risk sentiment improved. The currency was buying 71.65 US cents, up from 71.36 US cents at 5pm on Friday.

The day’s trading points to a market still heavily shaped by geopolitical expectations. Any signs of a durable US-Iran agreement could further ease pressure on oil and support risk appetite, while setbacks would likely bring renewed volatility across energy, equities and currency markets.

 

Flash PMIs show growth cooling as prices rise

Business activity weakened across the eurozone and UK in May while US growth stayed modest, as the war in the Middle East continued to feed through into prices, supply chains, stockpiling and confidence, according to the latest flash PMI data from S&P Global.

The eurozone recorded the sharpest deterioration. Its composite output index fell to 47.5 from 48.8 in April, a 31-month low and the second consecutive month below the 50 no-change mark. The services index dropped to 46.4, a 63-month low, while manufacturing output remained in expansion at 51.0, though down from 52.3 and the slowest reading in four months.

Demand conditions also worsened. New orders fell at the sharpest pace for a year and a half, with both services and manufacturing reporting declines. New export orders, including intra-eurozone trade, fell at the fastest pace since January 2025. Employment declined for a fifth month, with the fall the sharpest since November 2020 and, excluding the pandemic, the largest since August 2013.

Cost pressure intensified further. Eurozone input prices rose at the fastest pace in three and a half years, while output price inflation reached a 38-month high. Manufacturers continued to build safety stocks, but supplier delivery times lengthened to the greatest extent in almost four years, leaving input inventories lower despite stronger purchasing.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the eurozone economy was taking “an increasingly severe toll from the war in the Middle East”. He added that survey data indicate the euro area economy looks set to contract by 0.2% in the second quarter.

The UK also moved into contraction. Its composite PMI fell to 48.5 from 52.6, the first decline in private sector output since April 2025 and a 13-month low. The services index fell sharply to 47.9, its weakest reading in 64 months, while manufacturing output rose to 52.4, a three-month high. The manufacturing PMI was unchanged at 53.7.

UK respondents cited subdued sales pipelines, weaker client confidence and delayed consumer spending decisions, particularly around international travel. New work fell slightly overall, as service sector weakness offset manufacturing gains driven by pre-purchasing, stock building and demand linked to data centre rollouts.

Price pressures remained elevated. Input cost inflation eased from April’s 41-month high but stayed well above its long-run average, with 66% of manufacturers and 51% of service providers reporting higher costs. Factory gate inflation rose to its highest since July 2022, while 26% of manufacturers reported weaker supplier performance and only 1% saw improvement. Pre-production inventories rose at the fastest pace since July 2022.

Williamson said the UK economy was facing “a perfect storm” as political uncertainty added to the impact of the Middle East war. He said the May data point to a 0.2% quarterly contraction.

The US remained stronger, but only modestly. Its composite PMI was unchanged at 51.7, with services slipping to 50.9 and manufacturing output rising to 56.2, a 49-month high. The manufacturing PMI rose to 55.3, its strongest since May 2022.

US growth was again skewed towards factories, where output was supported partly by precautionary stock building. Services demand remained sluggish, and service exports fell at the sharpest pace for six years. Employment fell overall for the second time in three months, with service job losses partly offset by the strongest manufacturing hiring for 11 months.

US input costs rose at the fastest pace since November 2022, while selling prices increased at the sharpest rate since August 2022. Supplier delivery times lengthened by the most since August 2022.

Williamson said the data show “only modest growth of business activity” as demand was squeezed by higher prices. He warned that inflation appears set to rise further just as the economy cools.

 

Long bond yields climb as US rate cut bets fade

US government bond yields have surged this month, with long-term Treasuries bearing the sharpest pressure as investors reassess inflation, growth and fiscal risks. Goldman Sachs says hotter-than-expected inflation data is the main driver, but not the only one. Phillip Lee, head of real money rate sales in Goldman Sachs Global Banking & Markets, points to a broader mix of sticky inflation, resilient growth and spillovers from higher global yields.

Together, those forces are pushing investors to scale back expectations for Federal Reserve rate cuts and price in the possibility that rates stay higher for longer. Shorter-term yields have risen as a result, but the more striking move has been further out the curve.

Last week, the 30-year Treasury yield reached its highest level in 19 years. That reflects not only the outlook for monetary policy, but also the extra compensation investors are demanding to hold longer-dated US government debt.

Fiscal concerns are part of that repricing. Persistent deficits, heavy Treasury issuance and questions over long-term debt sustainability are all adding pressure to the long end of the market. For investors, that means duration risk is being priced more heavily at a time when inflation has not yet settled comfortably back to target.

That leaves the pressure concentrated at the long end of the curve, where investors are demanding more compensation for inflation risk and heavier bond issuance. “I think rates are going higher,” Lee states.

His view is that longer-term yields could keep rising as investors demand more compensation for the risk of higher inflation and larger bond issuance. Shorter-term rates, by contrast, are likely to be more closely tied to Fed policy.

Lee expects the Fed’s path to be relatively balanced between hikes and cuts over the coming years, suggesting the yield curve may remain shaped by fiscal and inflation risk as much as by immediate central bank expectations.

It’s clear that long-term funding assumptions may need to be revisited. Higher Treasury yields can feed into borrowing costs, discount rates and refinancing plans, particularly for companies exposed to longer-dated debt markets.

 

Standard Chartered issues first green wonton bond

Standard Chartered has issued a HK$2bn green wonton bond, marking its first Hong Kong dollar-denominated green bond and the first public HK dollar green bond from a financial institutions group issuer. The deal is also Standard Chartered’s largest Hong Kong dollar issuance, exceeding its previous HK$1.5bn record. Investor demand was strong, with the orderbook peaking at more than HK$3.8bn.

Proceeds will be used to help finance renewable energy, green buildings and circular economy projects, primarily in Asia, under the bank’s Sustainability Bond Framework. Standard Chartered said the projects are intended to support cleaner electricity grids, more efficient commercial real estate and reduced pollution.

The transaction is the bank’s sixth sustainable finance issuance, following a €1bn green bond in January 2026, and reinforces its position as a repeat issuer of sustainable debt.

The issuance also broadens Standard Chartered’s funding base by drawing on a distinct Hong Kong dollar liquidity pool. For treasury and funding teams, that is a notable element of the deal: green issuance is being used not only to finance eligible assets, but also to access investors across currencies and jurisdictions.

The proceeds will reference Standard Chartered’s Sustainable Finance asset pool, which includes US$17bn in green assets. More than 62% of that pool is located in Asia, Africa and the Middle East.

The bank said the impact of financing across those projects for the period from 1 October 2024 to 30 September 2025 is included in its latest Sustainable Finance Impact Report.

 

ETR Digital and Calculum target working capital liquidity

ETR Digital and Calculum are expanding their collaboration to help corporates identify and act on working capital opportunities across supply chains. The partnership combines Calculum’s Ada analytics platform with ETR Digital’s Working Capital Notes, bringing together payment terms analysis and invoice financing capabilities. The aim is to help treasury and procurement teams assess liquidity opportunities, improve cash conversion cycles and support supplier funding needs.

Ada uses AI-driven analytics to evaluate supplier payment terms, cost of debt, sustainability metrics and peer benchmarks. That gives companies a clearer view of how their payment terms compare with the market, where liquidity may be trapped and where working capital performance could be improved.

ETR Digital’s Working Capital Notes provide a digital framework for financing approved business-to-business invoices. The structure is designed to allow suppliers to access liquidity earlier, while giving corporates and financial institutions another way to manage working capital across supplier networks.

The relevance for treasury teams lies in the link between analysis and execution. Many companies can identify payment term inefficiencies or cash conversion opportunities, but turning those findings into financing structures that work for buyers, suppliers and funders is often harder.

“Working capital has become a much more strategic priority for both treasury and procurement teams, particularly in sectors managing long payment cycles and complex international supply chains,” said Wayne Mills, chief product officer at ETR Digital. “Earlier access to liquidity can have a meaningful impact across supplier networks, but implementation needs to work within existing commercial relationships and operational processes.”

 

Modern Treasury launches global dollar accounts

Modern Treasury has launched Global USD Accounts, allowing platforms to offer named US dollar accounts to eligible individuals and businesses in more than 90 countries. Each account includes unique routing and account numbers, and supports collecting, holding and sending funds across ACH, wire, RTP, FedNow and stablecoin rails through a single application programming interface.

The product is aimed at platforms whose users operate in dollars but do not have direct access to US financial infrastructure. Modern Treasury said customers had asked for programmable USD accounts that could support both traditional payment rails and stablecoin workflows.

Users will be able to receive ACH and wire payments from US payers, hold balances in US dollars and send payouts via ACH, wire, RTP and FedNow. Platforms can also use native ACH pull support for on-demand or recurring funding flows.

Stablecoin orchestration is part of the setup. Platforms can manage fiat and stablecoin flows through a single ledger and API, with payments recorded in real time against Modern Treasury’s proprietary ledger.

The company plans to expand the product with inbound and outbound international wire transfers via Swift, push-to-card, cheque sending, FDIC pass-through insurance on eligible balances, programmable wallet infrastructure and support for received debits.

Compliance features include onboarding, identity verification, anti-money laundering monitoring and transaction screening from account creation. Accounts are held with US banking partners and ledgered to protect customer funds.

 

BofA joins CLS cross-currency swaps service

Bank of America has gone live on CLS’s Cross Currency Swaps service, joining other global banks using the platform to reduce settlement risk and improve liquidity efficiency in foreign exchange markets. Cross-currency swaps involve initial and final exchanges of principal, which can create significant settlement risk if one side of the transaction fails to settle. They can also create operational and liquidity pressures when settled on a gross bilateral basis.

CLS’s service addresses those issues by settling payment instructions for the principal exchanges through a payment-versus-payment mechanism. This is designed to ensure that both legs of the swap settle simultaneously, reducing counterparty failure risk on those payments.

The service is an extension of CLSSettlement and can be used with OSTTRA MarkitWire’s post-trade processing platform, allowing cross-currency swap flows to be integrated into CLS settlement processes. Participants can also benefit from multilateral netting for FX transactions, reducing daily funding requirements.

The launch comes as policymakers and regulators push for wider use of payment-versus-payment settlement to reduce risk in global FX markets. CLS said average daily settled value for cross-currency swaps submitted to CLSSettlement rose by 87% in 2025.

The wider market backdrop is also important. According to the Bank for International Settlements’ 2025 Triennial Survey, daily FX turnover reached about US$9.6 trillion in April 2025, up 28% from the 2022 survey.

As FX volumes grow, settlement risk is receiving more attention. The FX Global Code encourages market participants to eliminate settlement risk where practicable, including through services that provide payment-versus-payment settlement, and to reduce the size and duration of exposure where it cannot be eliminated.

 

BNY and Manchester Uni launch AI work alliance

BNY and The University of Manchester have launched a five-year, £5m Future of Work Alliance focused on the responsible use of human-led AI in large, data-intensive organisations. The initiative will combine BNY’s experience deploying AI with the university’s research in applied AI, data science and inclusive innovation. It will be delivered through Alliance Manchester Business School and enabled by Unit M, the university’s innovation arm.

The alliance will use real operational challenges to connect academic research with business needs, with a focus on designing, testing and scaling models for responsible AI adoption. It will also include executive and professional education programmes covering leadership, governance and change management in AI-enabled organisations.

Five areas will sit under the programme. The BNY Research Challenge Program will turn operational issues into student-led academic projects. Bespoke executive education will support BNY leaders working in an AI-enabled environment, while postgraduate internships will give students placements at BNY’s Manchester office.

The initiative will also fund five AI-focused scholarships and a BNY-endowed chair through the university’s Challenge Accepted campaign. A keynote lecture series will bring together academic and industry speakers on workforce change and responsible AI.

The partnership strengthens BNY’s presence in Manchester, where it has operated since 2005, and adds to its existing university relationships with Carnegie Mellon University and the University of Central Florida.

 

WiseTech joins DCSA shipping standards programme

WiseTech Global has joined DCSA+, the Digital Container Shipping Association’s partnership programme, as the container shipping industry pushes for wider adoption of open digital standards. WiseTech develops logistics execution and supply chain software, including CargoWise and e2open. Its systems are used by 46 of the top 50 global third-party logistics providers and 23 of the 25 largest freight forwarders.

The partnership is aimed at accelerating the adoption of standardised integrations across container shipping, where data still often moves through proprietary systems, bespoke connections and manual processes. That fragmentation can add delay, cost and errors across handoffs between shippers, freight forwarders, inland carriers, ports, ocean carriers, customs and consignees.

DCSA’s standards cover common data models and open application programming interfaces across processes including bookings, shipment instructions, bills of lading, track and trace, container location tracking, vessel schedules, customs documentation and freight invoicing.

WiseTech has implemented DCSA standards since 2019 and is described as one of the largest users of DCSA-specification carrier APIs. Its involvement in DCSA+ will give it a formal role in standards development and testing, with the aim of ensuring standards can be adopted in real operating environments.

For corporate finance and treasury teams, the significance lies in the downstream impact of cleaner shipping data. Better digital standards can improve visibility over goods in transit, reduce documentation errors and support more reliable freight invoicing, all of which can affect working capital, trade documentation and supply chain planning.