Mainland China’s new and existing home prices posted a smaller month-on-month decline in January, but the annual drop widened, indicating a housing market that has yet to find a clear floor, analysts said.

Commercial residential prices across 70 major cities fell at a slower pace from December on a monthly basis, while new-home prices in the four tier-one cities dropped 2.1 per cent year on year, 0.4 percentage points steeper than the previous month, according to data released by the National Bureau of Statistics (NBS) on Friday.

Shanghai was the only tier-one city to record annual growth in new-home prices, rising 4.2 per cent. Beijing, Guangzhou and Shenzhen posted declines of 2.4 per cent, 5.3 per cent and 4.9 per cent, respectively, with the pace of falls accelerating in Guangzhou and Shenzhen.

Second-hand home prices in tier-one cities dropped 7.6 per cent year on year, widening by 0.6 percentage points from December, with all four cities registering declines, NBS data showed.

The bank said it expected further easing measures this year, including additional mortgage rate cuts, more relaxed home purchase restrictions in tier-one cities, and stronger policy support for urban village redevelopment and local government purchases of unsold housing inventory.

China’s property sector, which accounted for roughly a quarter of the economy at its peak, has been in a prolonged downturn since late 2020, with falling home prices weighing on household wealth.

Local governments have rolled out a series of supportive measures in recent months, though no major nationwide stimulus has yet been introduced.

She added that the quarterly decline was expected to narrow progressively over the course of the year, with tier-one city prices likely to stabilise and return to year-on-year growth in the fourth quarter.

That fear is breathing new life into the market for credit derivatives, where banks, investors and others can protect themselves against borrowers larding on too much debt and becoming less able to pay their obligations. Credit derivatives tied to single companies didn’t exist on many high-grade Big Tech issuers a year ago, and are now some of the most actively traded US contracts in the market outside of the financial sector, according to Depository Trust & Clearing Corp.

While contracts on Oracle Corp. have been active for months, in recent weeks, trading on Meta Platforms Inc., the parent of Facebook, and Alphabet Inc. has become much more active, the data shows. Contracts tied to about $895 million of Alphabet debt are outstanding, after netting out opposite trades, while around $687 million is tied to Meta debt.

With artificial intelligence investments expected to cost more than $3 trillion, much of which will be funded with debt, hedging demand can only grow, according to investors. Some of the richest tech companies in the world are rapidly turning into some of the most indebted.

“This hyperscaler thing is just so ginormous and there’s so much more to come that it really begs the question of ‘do you want to really be nakedly exposed here?’,” said Gregory Peters, co-chief investment officer at PGIM Fixed Income. Credit derivatives indexes, which offer broad default protection against a group of index members, aren’t enough, he said.

Six dealers quoted Alphabet CDS at the end of 2025 compared with one last July, while the number of Amazon.com Inc. CDS dealers rose to five, from three, DTCC data show. Some providers even offer baskets of hyperscalers’ CDS, mirroring baskets of cash bonds that are rapidly being developed.

Activity among hyperscalers really picked up in the fall when news around the debt requirements of these companies became front and center. A Wall Street dealer said his trading desk is able to regularly quote markets of $20 million to $50 million for a lot of these names, which didn’t even trade a year ago.

For now, hyperscalers are having little trouble financing their plans in the debt market. Alphabet’s $32 billion debt sale in three currencies this week drew orders for many times more that amount within 24 hours. The technology company successfully sold 100-year bonds, an astonishing move in an industry where businesses can rapidly become obsolete.

Morgan Stanley expects borrowing by the massive tech companies known as hyperscalers to reach $400 billion this year, up from $165 billion in 2025. Alphabet said its capital expenditures will reach as much as $185 billion this year to finance its AI build-out.

That kind of exuberance is what has some investors worried. London hedge fund Altana Wealth last year bought protection against Oracle defaulting on its debt. The cost was about 50 basis points a year for five years, or $5000 a year to protect $1 million of exposure. The cost has since risen to around 160 basis points. Bank Users

Banks that underwrite hyperscaler debt have been significant buyers of single-name CDS lately. Deals to develop data centers or other projects are so big and happening so fast underwriters are often looking to hedge their own balance sheets until they can distribute all of the loans tied to them.

“Expected distribution periods of three months could grow to nine to 12 months,” said Matt McQueen, head of credit, securitized products and muni banking at Bank of America Corp., referring to loans on projects. “As a result, you’re likely to see banks hedge some of that distribution risk in the CDS market.”

Wall Street dealers are rushing to meet the demand for protection.

“Appetite for newer basket hedges can be expected to grow,” said Paul Mutter, formerly the head of US fixed income and global head of fixed income sales at Toronto-Dominion Bank. “More active trading of private credit will create additional demand for targeted hedges.”

Some hedge funds see banks’ and investors’ demand for protection as an opportunity to profit. Andrew Weinberg, a portfolio manager at Saba Capital Management, described many CDS buyers as “captive flow” clients — bank lending desks or credit valuation adjustments teams for example.

Leverage remains low at most of the big tech companies, while bond spreads are only slightly tighter than the corporate index average, which is why so many hedge funds, including his, are willing to sell protection, according to Weinberg.

“If there’s a tail risk scenario, where will these credits go? In a lot of scenarios, the big companies with strong balance sheets and trillion dollar market caps will outperform the general credit backdrop,” he said.

But for some traders, the frenzy of bond selling has all the hallmarks of complacency and mispriced risk.

“The sheer amount of potential debt suggests that these companies’ credit risk profiles could come under some pressure,” said Rory Sandilands, a portfolio manager at Aegon Ltd., who says he has more CDS trades on his book than a year ago.

Donald Trump is planning to scale back some tariffs on steel and aluminium goods as he battles an affordability crisis that has sapped his approval ratings ahead of November’s midterm elections. The US president hit steel and aluminium imports with tariffs of up to 50 per cent last summer, and has expanded the taxes to a range of goods made from those metals including washing machines and ovens. But his administration is now reviewing the list of products affected by the levies and plans to exempt some items, halt the expansion of the lists and instead launch more targeted national security probes into specific goods, according to three people familiar with the matter. The people said trade officials in the commerce department and US trade representative’s office believed the tariffs were hurting consumers by raising prices for goods such as pie tins and food and drink cans. Trump’s tariff blitz has pushed US duties to their highest level since before the second world war. But the president has repeatedly walked back some of his stiffest levies amid voter anger at the US’s affordability crisis. More than 70 per cent of US adults rate economic conditions as fair or poor, according to a Pew Research Center poll published this month. About 52 per cent of Americans think Trump’s economic policies have made conditions worse.

The administration has already provided carve-outs for popular food products in a bid to tame grocery price inflation for ordinary Americans. It also called a truce in its trade war with China after Beijing retaliated with its own tariffs. The move to soften the steel and aluminium tariffs, which were among the earliest introduced in Trump’s second term, comes as economists say that Americans are paying for the levies, undercutting the president’s claim that foreign companies would bear the burden. Trump’s trade war has also brought political backlash, even from some allies. On Wednesday, members of Trump’s own Republican Party joined Democrats as the US House of Representatives voted to overturn Trump’s tariffs on Canada — delivering a major rebuke of his trade war on the US’s second-biggest trading partner. Trump is expected to veto the bill, leaving the levies in place. Several Republican lawmakers face tough election battles in their home states in November’s midterm elections amid voter anxiety about the impact of tariffs on small businesses and consumers. The latest move on the metals tariffs is also designed to bring clarity to an increasingly complicated lobbying process in Washington that has emerged since Trump imposed the levies. The administration has so far largely allowed US businesses to lobby for products made of steel and aluminium made by rival foreign producers to be hit with tariffs, in a so-called inclusion process. The process has been run by the commerce department, which has mostly approved the requests from domestic companies, which have cited the “national security” risks associated with goods including bicycle parts. But the mechanism has led to a sprawling list of household goods subjected to tariffs of up to 50 per cent on their metal content. Officials felt the tariff regime was “too complicated to enforce”, one person said, and needed to be simplified.

Countries including the UK, Mexico and Canada as well as EU members could stand to benefit from any easing of the US’s tariffs on goods made of steel and aluminium. One European business leader, who declined to be named, said they knew of a company that had sent four identical containers of machinery to the US and was charged different rates for each one. The commerce department last offered US companies an opportunity to nominate foreign suppliers to be hit with tariffs in October, but blew past its own 60-day deadline to greenlight new levies. As part of that round, American manufacturers of mattresses, cake tins and bicycles all lobbied for extra duties on foreign businesses. “Steel is not just a commodity, it is a national security asset,” said Kevin Dempsey, president and CEO of the American Iron and Steel Institute. “It is critical that the US government maintain the Section 232 national security steel tariffs, said Dempsey, who added they “are essential to prevent this overcapacity from fuelling new surges of harmful imports into the US market, which would cause a profound threat to American national security and undermine the health of the American steel industry”. The close to 100 filings underscore the broad range of items that companies are now arguing pose a national security risk to the US. One company argues in its filing that “without bread, buns, baguettes, crusty rolls, cakes, muffins and the like”, soldiers in the US military “will not be able to maintain a healthy diet”. The commerce department, the US trade representative’s office and the White House all declined to comment.

The decision to send the Ford Carrier Strike Group (CSG) from the Caribbean to the Middle East was made after the Navy’s top officer said he would give “push back” against such an order over concerns about the welfare of the crew and the condition of the ship after being deployed for so long. The carrier departed Norfolk last June for the Mediterranean. It was later dispatched to the Caribbean last October by President Donald Trump to take part in a mission that ultimately resulted in the capture of Venezuelan dictator Nicolas Maduro. Trump’s new deployment order for the Ford came as he is considering whether to attack Iran amid ongoing negotiations and after sending the Abraham Lincoln CSG to U.S. Central Command area of operations. “I think the Ford, from its capability perspective, would be an invaluable option for any military thing the president wants to do,” Adm. Daryl Caudle, the Chief of Naval Operations (CNO), told a small group of reporters, including from The War Zone, last month at the Surface Navy Association’s (SNA) annual symposium. “But if it requires an extension, it’s going to get some push back from the CNO. And I will see if there is something else I can do.” Caudle didn’t provide any specifics about what actions he would take to forestall an extension.

Regardless, the order to send the Ford CSG to the Middle East will extend its time away from its homeport even further. The ship won’t even get to the region until near the end of this month and it’s unclear how long it will be needed there, although Trump has mentioned something of a loose timeline. “I guess over the next month, something like that,” Trump said Thursday in response to a question about his timeline for striking a deal with Iran on its nuclear program. “It should happen quickly. They should agree very quickly.” There is also a chance that the Ford could be ordered to turn around should a deal be reached with Iran. Trump also said it would be “very traumatic” for Iran should no deal be reached. On Friday, Trump gave reporters his rationale for ordering the Ford to the Middle East. “We’ll need it if we don’t make a deal,” the U.S. president told reporters.

“The strike group’s current deployment has already been extended once, and its sailors were expecting to come home in early March,” The New York Times, which was first to report that the Ford was ordered to the Middle East, noted. “The new delay will further jeopardize the Ford’s scheduled dry dock period in Virginia, where major upgrades and repairs have been planned.”

NO MAINTENANCE, ONLY DEPLOYMENT

It is publicly unknown what discussions the CNO had with senior administration and Pentagon officials and whether he raised any objections or sought alternatives to keeping the Ford at sea longer than anticipated. We have reached out to his office and will update this story with any details provided. We also reached out to the White House and Joint Chiefs of Staff, which referred us to the CNO’s office. At the SNA conference, Caudle emphasized that there is a price to be paid for the strike group after being away from homeport for more than 200 days under often intense conditions. That was almost exactly a month ago. “I am a big non-fan of extensions, and because they do have significant impact,” Caudle explained. “Number one, I’m a sailors-first CNO. People want to have some type of certainty that they’re going to do a seven-month deployment.” Beyond affecting people, extensions also have a detrimental impact on the ship in addition to its previously noted dry dock schedule. “So now, when the ship comes back, we expected the ship to be in this level of state in which it was used during that seven-month deployment, when it goes eight, nine-plus months, those critical components that we weren’t expecting to repair are now on the table,” Caudle pointed out. “The work package grows, so that’s disruptive.”

In addition to the maintenance issues Caudle brought up at the SNA conference, the Ford also is also plagued by sewage issues. You can read more about how detrimental deferred maintenance is to carriers — or any U.S. Navy warship for that matter — that get their deployments extended in our deep dive here. It is not unusual for there to be two carriers deployed to the Middle East region. For instance, a year ago, the U.S. Navy had both the USS Harry S. Truman and the USS Carl Vinson aircraft carriers in the Middle East at the same time, engaged in combat operations against Yemen-based Houthi rebels. However, the Navy has 10 active carriers after the Nimitz, the service’s oldest, returned to port in December ahead of a scheduled decommissioning. There are scheduling and logistical support limits to how many can be out at sea at the same time without massive disruptions down the line. The USS Eisenhower, the last carrier to make an extended deployment, has seen its planned maintenance extended for a half year and counting as a result of the additional strain of being away from its home port for so long. The Navy’s Fiscal Year 2026 budget shows that work on the ship was supposed to have been completed last July, but it is still unfinished. The lack of availability reverberates across the rest of the fleet. That in turn limits the options commanders have when planning or preparing for contingencies and puts the overall carrier availability plan out of whack.

As for the rest of the fleet, three other carriers are in various maintenance periods taking them out of action for extended periods. In addition, the USS George Washington is forward deployed to Japan, two carriers are preparing for deployment and two are in post-deployment mode. The move to send the Ford to the Middle East comes amid a growing buildup of forces ahead of a potential conflict with Iran. In addition to the Ford, the Pentagon is also dispatching a peculiarly small number of Air Force tactical aircraft to the Middle East, joining a limited number of aircraft already there on land and sea.

The move to send the Ford to the Middle East comes amid a growing buildup of forces ahead of a potential conflict with Iran. In addition to the Ford, the Pentagon is also dispatching a peculiarly small number of Air Force tactical aircraft to the Middle East, joining a limited number of aircraft already there on land and sea. In addition to the Lincoln, there are also at least nine other warships in the region, including five Arleigh Burke class guided missile destroyers. Submarines are also there, but their presence is not disclosed, and there are more than 30,000 troops on bases around the Middle East. Another CSG, with its embarked tactical aircraft and Aegis-equipped escorts, would certainly bolster America’s firepower in the Middle East. As we have frequently pointed out, even with the jets that are there and those arriving, there is not enough tactical airpower there now for a major sustained operation. A second CSG would provide significant help. It remains unknown what orders Trump will give or when, but a second carrier strike group in the region gives him more options.

also a few excerpts from the article about sewage trouble linked above, just to top this off

The world’s largest aircraft carrier is experiencing difficulties with a service that is an integral part of every sailor’s life — the bathroom. ... The complications primarily involve the Ford’s vacuum collection, holding and transfer system, or VCHT, which transports and disposes wastewater by sucking fecal matter through pipes using pressure. ... NPR also reportedly obtained copies of emails that showed there were 205 breakdowns with the toilets over a span of four days. One of the emails placed the onus on sailors and said they were mistreating and destroying the sewage system. Carter confirmed to Military Times in an emailed statement that the Ford averaged about one maintenance call per day and that those calls were often the result of “improper materials being introduced to the system.”

what are the sailors flushing down those toilets

The bathroom issues aboard the Ford, meanwhile, are not a new phenomenon. A 2020 Government Accountability Office report pointed out that the sewage pipes woven throughout the ship were too narrow to properly serve the flushes of the 4,000-plus crew members onboard. To unclog the toilets, the Navy has been forced to spend $400,000 per flush of a unique acidic chemical designed to flush out and unburden the strained pipes.

As the world’s geopolitical elite gather later this week at the Munich Security Conference, many European analysts and policymakers will urge their governments to develop the means to defend themselves in response to the Trump administration’s policies over the past year. First, there is a rift over values and sovereignty. The 2025 US National Security Strategy warned European allies of “civilizational erasure” as a result of immigration, vowing that the United States would “cultivate resistance” against mainstream political forces in Europe. Second, President Donald Trump repeatedly demanded control of Greenland, the territory of NATO ally Denmark, and refused to rule out force to do so. After European allies stood by Denmark, Trump finally ruled out force, but he continued to insist that the United States must control Greenland. Finally, the Trump administration has repeatedly demanded that European allies provide for their own security, with the United States in only a supporting role. As a result of Trump’s policies, many in Europe no longer trust the United States to fulfill its obligations under NATO’s Article 5. As European leaders discuss steps toward defense independence, however, they face three significant roadblocks in their way.

1. Europe Still Depends on the United States for “Critical Enablers”

Given the Trump administration’s demand that Europeans take more responsibility for their own defense, it makes perfect sense that Trump pushed allies to spend more on their armed forces. As such, the allied commitment at NATO’s 2025 Hague summit to spend 3.5 percent of GDP on defense and an additional 1.5 percent on defense-related needs is a step in the right direction. However, spending more will not be sufficient to achieve defense independence. European allies will need to develop special capabilities that they currently rely on the United States to provide. These “critical enablers” include integrated intelligence, surveillance, reconnaissance, strategic airlift, missile defense, and suppression of enemy air defense. To attain these capabilities, European allies will also have to coordinate with one another, and it will take time to acquire them and deploy them effectively to defend the continent.

2. Europe’s Varying Threat Perceptions on Russia

My research, including 98 original interviews with policymakers and analysts from six leading NATO countries, suggests that allies perceive different threats and different levels of threat. For over a decade, allies such as Poland have been laser-focused on the threat Russia poses and willing to take all steps necessary to address it. A senior Polish national security official told me, “Russia is a resurgent, revisionist, post-colonial power aiming to rebuild its empire and its sphere of influence.” In Germany, I heard a similar view that Russia is a significant threat to German and European security (though aspects of German identity are limiting its response). Polish and German threat perceptions explain their defense spending decisions. Poland plans to spend 4.8 percent of its GDP on defense in 2026, whereas Germany’s 2026 budget of €108 billion is almost 50 percent more than its 2024 budget (€74.5 billion). In France and the UK, there is less intense concern about the threat posed by Russia. In Paris and London, I heard concerns about Russia’s capabilities and intentions regarding Europe. For example, a French Defense Ministry official told me: “Protecting Europe is most important because of its proximity to France, and Russia poses a great threat to European security.”

Policymakers and analysts in both countries believe, however, that their independent nuclear arsenal means that Russia would not directly target British or French territory. Accordingly, the threat from Moscow is less pressing. Why does this lower level of concern with Russia matter? Reporting suggests that neither the UK nor France—the second and third largest economies in Europe—is on track to achieve NATO spending targets prior to 2035. In interviews in Rome, I repeatedly heard that the most significant threat to Italy is instability in the Mediterranean, which fuels uncontrolled migration. As a result, the Italian government struggles to justify increases in defense spending. Italy’s government met the 2 percent of GDP spent on defense target not through new spending but by reclassifying existing spending. Italy’s defense minister recently said that his government hopes—contingent on fiscal constraints—to spend 2.5 percent of GDP on defense by 2028. Lest one think Italy does not matter, Italy is Europe’s fourth-largest economy, and other allies on NATO’s Southern Flank share its lack of concern with Russia.

3. France and the UK’s Post-Imperial Identity vs. Italy and Germany’s Pacifist Identity

The historical experiences and identities of leading European allies provide a final challenge on the road to European defense independence. Many of the people I interviewed in France and the UK consider their countries to be global powers because of their experience at the helm of global empires. Today, global power identity underpins each country’s global military posture—the UK has significant troop contingents deployed to Bahrain, Brunei, and Cyprus; France has large contingents of “sovereignty” forces deployed from South America to the South Pacific and “prepositioned” forces in the Ivory Coast, Djibouti, and Chad. The fact that Britain and France have a global power identity also means that they continue to structure their militaries, at least in part, around the need to deploy small, highly trained military contingents worldwide. The UK and France’s global military posture and structure are not an issue if the United States continues to lead in providing for European security. If, however, Europe is to attain defense independence, all hands must be on deck, and the posture and structure of European allies must focus on the threat from Russia. In Italy and Germany, the historical legacy of bloody and disastrous expansionism in World War II means that the publics of both countries harbor deep skepticism toward defense spending and the use of military force. These anxieties are present in the German debate on conscription, with the military ultimately accepting a voluntary model that many believe is insufficient to address the Russian threat. Italy’s pacifism is manifest in a lack of public support for defense spending and a military that has been used in recent years for peace operations abroad and domestic policing. Pacifism in Germany and Italy stands in the way of the moves both countries would have to make to contribute to European defense independence.

How Europe Can Overcome Its Roadblocks

Given these roadblocks, what should be done? Policymakers need to speak clearly and regularly about the necessity of costly steps European governments must take to be responsible for their own defense. In so doing, they must be sensitive to threat perceptions and identity. For example, German General Alexander Sollfrank recently said, “Deterrence only works if it’s credible. We must be ready to fight so that we do not have to fight.” General Sollfrank made clear that greater military means are necessary if the Germans want to avoid war. Europe’s leaders must make the case to their people that sacrifices are necessary to ensure the continent avoids future war.

uh, yeah, good luck with that