European Bonds Suffer the Most as Investors Fret About Energy and Elections
Source: Bloomberg
Germany’s electricity market is flashing another warning sign.
The country’s one-year forward power price has surged to €122/MWh—its highest level since 2023. This matters because the contract is a key benchmark for the procurement costs faced by household electricity suppliers. The main culprit? Surging natural gas prices. Under Europe’s merit-order system, the most expensive power plant required to meet demand sets the wholesale electricity price. And that plant is often gas-fired. So even when most electricity comes from cheaper sources, rising gas prices can lift the cost of the entire power market. The result: renewed pressure on households, businesses and Germany’s industrial competitiveness. Source: HolgerZ, Bloomberg
A great chart by FT on the changing ownership of government bonds. France may be the European bond market to watch!
Indeed, in light of 2027 Presidential election. foreign investors could trigger the next phase of France’s sovereign downgrade Despite repeatedly breaching EU debt and deficit limits, non-resident investors still held a striking 57% of French government debt at the end of 2025. France also benefits from the perceived safety net of the European Central Bank, with markets broadly assuming that the ECB would intervene in the event of a severe bond-market crisis. But the 2027 presidential election could put both foreign investor confidence and that ECB backstop to the test. Source: Financial Times, Christophe BESSON
A $636M bet on Italy’s ultra-luxury hotel boom.
Billionaire investor Sir Christopher Hohn’s TCI has quietly built a major exposure to loans backed by some of Italy’s most prestigious hotels. 🏨 $392M — Hotel Danieli, Venice 🌊 $132M — Caesar Augustus, Capri 🏔️ $74M — Six Senses, Lake Como 🏙️ $38M — Mandarin Oriental, Milan The thesis is simple: scarcity + pricing power. Italy’s revenue per available hotel room surged 53% between 2019 and 2025, the strongest increase in Europe, driven largely by luxury properties. Historic palazzi, prime waterfront locations and strict planning rules mean supply cannot easily respond to booming demand from wealthy international travellers. For Hohn—an investor obsessed with businesses able to raise prices faster than inflation—ultra-luxury Italian hotels increasingly look like real-estate monopolies in disguise. And TCI is financing them. Source: FT
A nightmare chart for Germany
Source; Robin Brooks
The world's largest sovereign wealth fund, the $2.3 trillion Norway Sovereign Wealth Fund, has disclosed for the first time that it holds a 0.05% stake in SpaceX.
The fund's stake in hashtag#SpaceX remains quite limited when compared to the other technology stocks in its portfolio. Source: ATA CAN
Norway Sovereign Wealth Fund H1 2026 results in a nutshell Record $184B profit... but tech-driven gains + SpaceX are the real story
Source: Emmanuel – Big Tech & AI Investor
European equities are regaining investor interest as strong earnings, falling oil prices and diversification away from volatile AI stocks improve the region’s appeal.
Earnings are accelerating: European companies are tracking 22% YoY Q2 earnings growth, the strongest since 2022, with broad strength across sectors. Banks are leading: The Stoxx Banks index is up 21% this year, versus 11.5% for the Stoxx Europe 600, supported by higher rates and strong trading revenues. Flows are returning: European ETFs recorded positive net inflows in July, while BlackRock saw $4.4bn flow into its European equity products. Lower oil helps: Oil below $90 and easing Middle East tensions have reduced fears of a major energy shock for Europe. Diversification appeal: July’s semiconductor sell-off reinforced Europe’s role as an “anti-AI” trade with less dependence on mega-cap technology. Fundamentals improving: Eurozone GDP grew a stronger-than-expected 0.4% in Q2, supporting the rotation. Source: FT
