| Heavy selling sparks steep drop in US stocks. Credit downgrade puts spotlight on US debt. Thai parties seek coalition without Move Forward. Here's what you need to know today. The move by Fitch Ratings to downgrade US government credit has put a renewed focus on the nation's debt trajectory, just when the world's largest economy is shaking off forecasts for a looming recession. Fitch forecasts US debt to reach 118% of gross domestic product by 2025, about three times higher than the median of 39% among countries awarded the top-of-the-class AAA rating — which the US just lost. It projects that the ratio will rise even higher in the longer term. And that could set up tough decisions for future administrations in the White House, analysts say. Former Treasury secretaries Hank Paulson and Timothy Geithner have urged Washington policymakers to address the country's long-term fiscal challenges before they become insurmountable. Here's why Fitch cut the credit rating, and what it means for the US. Asian equity futures fell after heavy selling in US stocks saw the S&P 500 drop 1.4% — its worst day since April. The plunge in stocks and long-dated Treasuries came as investors digested data showing a hot US labor market that will keep pressure on the Federal Reserve to maintain restrictive policy. The Bank of England is expected to increase interest rates 25 basis points to 5.25% later today. Speculation is also growing that it will surprise economists by signaling an increase to the pace of bond sales. Meanwhile, investors will be keeping a keen eye on Apple and Amazon results due Thursday. Thailand's Pheu Thai, a party linked to former premier Thaksin Shinawatra, said it will form a new coalition with possible backing of conservative parties to end a political stalemate that has gripped the country since the May election. It will seek to form a government without Move Forward — the party that won most seats on May 14. The new Pheu Thai-led coalition will nominate property tycoon Srettha Thavisin for the prime minister's post, party leader Cholnan Srikaew said. Angry pro-democracy activists sprayed paint across Pheu Thai's headquarters in Bangkok, burnt effigies and shouted the party had "betrayed the people." Singapore worked closely with the UK to investigate and prosecute Formula One mogul Bernie Ecclestone, according to a written reply to parliamentary questions by Deputy Prime Minister Lawrence Wong.
Ecclestone pleaded not guilty in June to a criminal fraud charge for failing to tell British authorities about assets held in a Singapore bank of around $650 million. Singapore has been hosting the F1 night race since 2008. Beyond Meat entered China in 2020 with a bang. Items from the plant-based meat company were featured in more than 3,300 Starbucks coffee shops, it launched a store on JD.com's shopping site, and created a Chinese-language website, as well as accounts on the WeChat and Weibo. Today? It's a quite different story. Beyond's faux meat products are no longer listed on Starbucks' online menus, JD.com has no Beyond products available, and on Alibaba's Hema Fresh, a popular grocery app, the only four customer comments under the listing for Beyond products are all negative. After dazzling investors in a 2019 IPO, here's how Beyond's China dream faltered. This time looks like maybe it will be different, when it comes to the US's second credit-rating downgrade. Treasuries sold off in the wake of the decision by Fitch Ratings to lower the score by one level from the highest grade, a stark contrast with the panic-driven plunge into US government debt that was triggered in 2011 when S&P Global Ratings made the same move. As a result the benchmark 10-year US yield jumped above 4% and into territory that has proven to be dangerous for equities as well.  The declines for Treasuries were at least partly due to the way in which Fitch's decision highlighted expectations that the US's already large debt pile is set to grow at a potentially rapid pace. The Treasury just announced a boost for issuance, borrowing costs are at multi-decade highs and the government's investment programs for infrastructure, technology and clean energy are going to make it hard for spending to decline. That adds to the danger for assets more broadly as well. Stocks shrugged off their initial concerns last month when 10-year yields popped to this sort of level, but that's because bond buyers piled in to bring yields back down. The credit downgrade may lead to a more sustained increase for yields that would offer a more severe test for stocks. Garfield Reynolds is Chief Rates Correspondent for Bloomberg News in Asia, based in Sydney. | 
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