Countries Growing 70% of World's Food Face 'Extreme' Heat Risk by 2045

Japan's economy grew more than initially reported in the second quarter, as the lifting of local COVID-19 restrictions boosted consumer and business spending.

That meant Japan saw its economy grow for a third quarter in April-June, even as worries about a slate of issues such as a global slowdown and high energy prices cloud the outlook.

Gross domestic product (GDP) in the world's third-largest economy expanded an annualised 3.5% in the second quarter, stronger than the preliminary estimate of annualised 2.2% growth, government data showed Thursday.

The reading, which was better than a median market forecast for a 2.9% gain, equals a real quarter-on-quarter expansion of 0.9% from the prior quarter.

"The economy achieved relatively high growth compared with the United States and China, staging a recovery in the second quarter," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"But it may be difficult for this momentum to continue...The global economy is facing all kinds of uncertainty and higher prices are causing suppression of consumption at home."

The growth suggests domestic demand rebounded modestly after the government removed pandemic-related curbs on activity in the first quarter. It was driven in part by a pickup in capital expenditure and a smaller decline of inventories such as cars, the data showed.

Private consumption, which makes up more than half of the country's GDP, grew 1.2%, the data showed, revised up from an initial estimate of a 1.1% increase.

Capital spending rose 2.0%, also revised up from a preliminary estimate of a 1.4% rise and more than a median market forecast for a 1.8% expansion, largely due to stronger software investment.

Domestic demand as a whole contributed 0.8 of a percentage point to revised GDP growth, while net exports added 0.1 of a percentage point.

Japan has lagged other major economies in shaking off the pandemic hit due to a slow consumption recovery, blamed partly on ageing consumers who are reluctant to spend on services like dining out and travel due to worries about contracting COVID-19.

Japan's ultra-loose monetary policy stands in stark contrast to a global wave of interest rate hikes, which has led to a sharp selloff in the yen, complicating the outlook for policymakers.

The slide in the Japanese currency, which has lost about 20% against the U.S. dollar over the past six months, is pushing up the cost of imports and raised the prospect that households will be forced to pay more for goods.

Wall Street snapped a week-long losing streak as bond yields eased surging, while oil futures tumbled on demand concerns, along with an accelerating devaluation in Chinese Yuan and Japanese Yen. China extends the covid-lockdowns in its major city Chengdu, which continued to weigh on energy and base metal prices. However, the weakened demand outlook in commodity markets helped reinforcing an expectation for cooling inflation, sending a relief to the Fed-led selloff in risk assets.

The Dow Jones Industrial Average rose 1.4%, the S&P 500 was up 1.84%, and Nasdaq advanced 2.14%. 10 out of the 11 sectors in the S&P 500 finished higher, with consumer discretionary and utilities leading gains, both up 3%. Energy was the only sector that closed in red due to a slump in the oil prices.

Apple unveils the iPhone 14 series products without price increases, including a 6.1-inch screen of iPhone 14 Pro, and a bigger model of iPhone 14 Max with longer battery life and better low-light photography. It also introduced satellite emergency service feature to the new phone series, allowing users to send SOS messages without a cellular connection.

GameStop's shares soared 10% in after-hours trading on the smaller-expected loss in the second quarter, with a net loss of $107.1 million. The company also announced to partner with crypto firm FTX.

Asian markets are set to bounce, following the comeback on Wall Street. ASX futures were up 0.43%. Nikkei225 futures rose 0.95%, and HSI climbed 0.44%. Chinese yuan eased devaluation as US dollar pulled back, while its foreign exchange reserves dropped to a four-year low due to falls in global assets, along with a strong USD. USD/CNH fell to 6.96.

US dollar index retreated from a 24-year high due to a slide in bond yields. Dollar index fell 0.61%, to 109.54, pushing the other major currencies to bounce back from their day-lows, with EUR/USD back to the parity level after dropping to 0.9875 at the lowest on Wednesday.

Crude oil tumbled to the lowest seen in January on demand concerns, while gold futures rebounded on a weakened US dollar. WTI futures fell 5.7%, to $81.94 per barrel, Brent futures slumped 5.48%, to $87.74 per barrel. Gold futures rose 0.87%, to $1,727.80 per ounce.

Sterling tumbled to the lowest level since 1985 before bouncing back on the new PM, Liz Truss's second day in office. The country is facing challenges of surging cost-of-living with record high inflation of 10.1% in July. GBP/USD dropped to 1.144 at the lowest at a time before bouncing back to 1.1532, which is flat with the opening rate.

Bank of Canada rose interest rate by 75 bps to 3.25% after a full percentage hike in July. The bank expects more rate hikes in the coming months to tackle sticky inflation. The country's inflation printed at 7.6% in July after a peak of 8.1% the prior month.

Bitcoin rebounded from a 2-year low, along with risk assets' comeback. Bitcoin rebounded from the day-low of under $19,000, up 2% to $19,386 in the last 24 hours, while Ethereum rose 4%, to $1,648.

With most countries only just starting to recover from the Covid-driven shock, the war in Ukraine has provided a further significant external shock for emerging market (EM) hard currency sovereign bonds this year. An environment of heightened geopolitical risk, monetary tightening in developed markets, surging inflation and commodity price volatility has made for something of a toxic combination for EM nations. This environment has prompted plenty of warnings from policymakers and the official sector about a further swathe of EM sovereign defaults and risks of a more systemic EM debt crisis.

A clear parallel has been drawn to the 1980s when a swathe of defaults and crises hit developing nations on the back of the Federal Reserve's aggressive rate hikes to tame persistent U.S. inflation. The chart below left shows the scale of EM sovereign defaults (mainly on foreign currency bank loans) in the 1980s, which reached almost a third of the outstanding stock of EM external public debt. In particular, Latin American sovereigns felt the pressure, given the unsustainable build-up of external debt relative to exports seen in the region (shown in light blue, below right).

This year, rising U.S. Treasury yields have started to increase borrowing costs for EM issuers, locked many out of international bond markets, as well as drawing investor portfolio flows away from EM countries and strengthening the U.S. dollar. IIF data has shown almost $40bn in cumulative portfolio outflows from emerging markets since February this year, pressuring weaker nations' balance of payments.

Sri Lanka defaulted after this external shock pushed the nation over the edge, although vulnerabilities had been building long before. Ill-advised tax cuts in late 2019 meant an early end to its IMF programme and loss of international bond market access. Consequently, sparse FX reserves had to be used to repay regular maturing Eurobonds and finance the current account deficit, while fiscal deficits have increasingly been financed by the central bank. Surging food and fuel prices finally meant maintaining a stable exchange rate and continuing to service hard currency bonds was nearly impossible as FX reserve levels collapsed to nearly zero. Russia, Belarus, and Ukraine have also all entered default, albeit for vastly different reasons on the back of war and sanctions.

Our view is that more defaults are possible among 'frontier' nations – loosely defined as lower-rated, smaller (and therefore less systemically important to the global economy) countries. JP Morgan's Next Generation Markets (NEXGEM) Index defines these frontier nations as having high yield ratings (BB+ or lower) at both S&P and Moody's, a weighting of less than 2% in the broader EMBI Global Diversified index for 12 months and not being actively engaged in seeking EU membership.

However, we are unlikely to see the widespread contagion of previous EM crises given improved fundamentals and more decisive policy action from major EM central banks. Generally, external debt levels now are far lower relative to exports and GDP than during the 1980s, while larger developing countries have built up buffers of FX reserves and floated their exchange rates in response to the chastening experiences of previous crises.

Unsurprisingly given the tough macro backdrop, 2022 has been a poor year for EM hard currency sovereign bonds. The ICE USD EM sovereign index has generated total return losses this year of around 19%, slightly weaker than similar indices for EM corporates (minus 14%) and broadly in line with EM equities. Returns for EM hard currency bonds have been hit by both rising U.S. Treasury (UST) yields and wider credit spreads (reflecting larger country risk premia and increased investor risk aversion towards emerging markets).

Despite a slight rebound since mid-July (when year-to-date returns were as low as minus 22%), returns at this stage in the year are the weakest since 1998, during the Russian financial crisis. Local currency EM bond indices have held up better, in part due to the resilience of Latin American currencies, as have U.S. High Yield (HY) corporates given the more stable macro situation there (minus 10% and minus 11%, respectively YTD).

And with concerns that Sri Lanka's default could be the canary in the coal mine for other more vulnerable EM sovereigns, markets have begun to price the risks of further crises among some of the weaker credits. The number of sovereigns trading at distressed levels (with dollar bonds spreads on average over 1000bp over USTs) has increased to 17, from 8 at the beginning of the year. This is down from 21 in mid-July, but remains an elevated number, and a few significant sovereigns such as Egypt, Angola and Nigeria have fluctuated around that level. Other than just signalling investor concerns, these spread levels also effectively lock issuers out of the international bond markets, which can be self-fulfilling in a crisis as sovereigns no longer have access to a key source of financing to roll over bond maturities.

Other than six nations already in default (Lebanon, Belarus, Zambia, Suriname, Sri Lanka, Ukraine), the below chart highlights further countries in distress, from the ICE EM USD sovereign sub-indices. Ethiopia has also already signalled intentions to restructure its debt under the G20 Common Framework. Argentina and Ecuador have recently restructured their debts and therefore have low near-term bond maturities, without fully regaining market confidence. Ghana and Pakistan stand out as sizable issuers ($13bn and $7.5bn in dollar bonds outstanding, respectively) that have experienced significant volatility and look reliant on the IMF and other bilateral lenders to meet their near-term funding needs. Tunisia has faced domestic political instability. El Salvador's unorthodox policymaking has caused concerns among bondholders and the IMF, but the nation plans to buy back some of its upcoming 2023 and 2025 bonds, which Finance Minister Alejandro Zelaya has claimed shows its "capacity to pay."

As previously mentioned, Sri Lanka succumbed to the combination of a large debt load and debt servicing costs, along with rapidly depleting reserves against large external financing needs. In an environment of tighter global financial conditions, a key indicator of vulnerability is a country's external financing requirement (current account deficit and external debt amortizations). The chart below scales these versus FX reserves, which can be used to finance external deficits absent financial inflows. It also plots the YTD change in FX reserves to see which countries have already been experiencing pressure in this regard. Sri Lanka, as expected, is the most extreme outlier on this scale, with the bottom right quadrant the area of most vulnerability. Pakistan, Ghana, Egypt and Kenya stand out as large issuers, all at or near distressed spread levels. The surge in commodity prices this year has put pressure on the current account balances of large food and fuel importers. In contrast, on this measure, Angola looks much safer despite current spread levels in line with many regional peers, with its current account balance supported by high oil prices.

On the fiscal side, high government debt levels also represent a vulnerability, in particular when analysing if creditors will need to take haircuts in a default or restructuring scenario. Here we plot government debt to GDP versus interest costs as a percentage of revenues to see where debt servicing is becoming prohibitively expensive. Sri Lanka is again the outlier, while Ghana, Egypt and Pakistan also show further vulnerability. Bahrain has high debt levels but lower servicing costs, in part due to support from peers in the Gulf Cooperation Council (GCC). In contrast, Nigeria's government debt is fairly low, but revenue collection is weak and therefore debt servicing costs screen as higher.

Generally, government debt levels rose significantly during the Covid crisis and now the current backdrop of high food and fuel prices means spending cuts on subsidies will be difficult to enact politically. With protests rising globally amid surging inflation and a cost of living squeeze, poorer nations remain particularly vulnerable to fuel and food prices.

Despite fairly pro-active central bank policy for most, inflation pressures have shown little sign of easing, in particular in CEEMEA and Latin America. Economic pressures can easily evolve into political unrest and become far less predictable, making unpopular reforms far more difficult.

To build on this analysis, the key for near-term default risk is looking at upcoming Eurobond maturities, and how they can be refinanced or repaid. The chart below shows refinancing needs on maturing bonds by HY country and year until the end of 2024, scaled by FX reserves. A positive for weaker Sub-Saharan African credits like Angola and Nigeria is that near-term refinancing risks are low. Ghana, Pakistan and Egypt are still below a reasonable risk threshold of 20%. Kenya has one sizable maturity, but not until 2024. Bahrain is the outlier, as has been the case in recent years, but strong support from peers such as Saudi Arabia mitigates some of this risk. Turkey's refinancing needs are sizable, so the nation will hope to regain market access in the near term. Risks for the likes of Oman and Azerbaijan are offset by strong current account surpluses and additional foreign assets held in sovereign wealth funds. On the whole, Eurobond refinancing needs are not at critical levels for most HY sovereigns in the coming year or two, but a longer period without market access would still be concerning for many.

To offset some of the negative news and risks highlighted, it is worth returning to our view that we are not staring down the barrel of a looming global EM crisis, with signs of widespread contagion. For one, many 'major' emerging markets have improved fundamentals relative to historical periods of stress. The likes of Mexico, Brazil, Indonesia, the Philippines, and South Africa have built up FX reserves, increasingly issue in local currency, and many are benefiting from improved terms of trade given elevated commodity prices. Central banks have been fairly active and orthodox in attempting to move ahead of the curve, and the Fed, albeit with a few notable exceptions. Foreign holdings of EM local assets are also relatively low and investor positioning in EM is fairly light, reducing another aspect of vulnerability.

Additionally, the IMF remains a key backstop for many weaker 'frontier' nations. Many of the stressed sovereigns mentioned are negotiating or already in IMF programmes (Kenya, Pakistan, Egypt, Ghana) and positive news or financing disbursements can often start a virtuous circle of investor confidence and market access. That's not to say, however, that the IMF acts as a safety guarantee for all. The interplay of reform requirements with domestic politics can be tricky – Sri Lanka left it too late to engage, having previously ended its IMF programme early and enacted tax cuts against recommendations, while the likes of Turkey have pre-emptively ruled out any IMF cooperation. And a country can still end up in a crisis and default when in an IMF programme (Argentina is the most recent example). Given these dynamics, alternative sources of official financing, such as China, India and the oil-rich Gulf nations have become increasingly important, along with the geopolitical factors that influence such decisions.

When putting these risks into context, valuations for EM sovereign credit look attractive at the headline level (ie index spreads wide versus normal levels), but delving deeper it's clear that HY sovereigns are the key driver of this. IG spreads, even in the BBB tier, look relatively tight to historical levels, while single-B sovereign spread levels remain elevated.

There has been plenty of regional differentiation in this dynamic. Surging energy prices have seen some significant outperformance and fundamental improvement for major oil exporters, such as the GCC in the Middle East, and Azerbaijan. GCC nations now have a combined weighting of around 20-25% in the major EM hard currency sovereign indices, having seen significant growth in issuance from almost nothing a decade ago, driven in part by the 2014 commodity price crash.

In contrast, a key area of concern has been the outlook for Europe, given the ongoing energy crisis pointing to a more severe growth slowdown. In turn, this has fed into weaker performance for Central and Eastern European sovereigns such as Hungary, Romania and Serbia. Before this year, the CEE region was perceived as fairly stable within the hard currency space, with many sovereigns trading at tight spreads relative to their ratings and fairly low volatility.

Looking forward, we expect volatility to continue as we remain in the middle of a tricky period for EM sovereigns. Uncertainty remains over the potential scale and duration of global monetary tightening along with the extent of the likely upcoming economic slowdown. Spread levels on HY EM dollar bonds have narrowed since mid-July, recovering somewhat from their sharp summer selloff but remaining elevated versus the past decade average. While we don't expect spreads to re-test the highs seen in mid-July, we do expect a larger-than-normal risk premium to remain priced in as investor concerns continue over the potential for further sovereign defaults. The key differentiator for lower-rated sovereigns is likely to be IMF support. Nations with a strong track record of IMF cooperation and the political breathing room to enact less popular reforms should be better placed to ride out the storm. Recent evidence of an uptick in IMF activity (agreements and dispersals for the likes of Zambia, Sri Lanka, Pakistan and Chile) is likely to be a trend that continues.

The UK's new prime minister, Liz Truss, has been in power only a day, but she is already running out of time. So grave are the problems Britain faces. Inflation has hit double digits and energy bills are set to rise by 80 per cent next month. More crises are brewing at home and abroad.

She will need to muster all the experience she has to overcome these difficulties, particularly from her time as foreign secretary, a position she gave up on Monday. James Callaghan was the last prime minister to go straight from the Foreign Office to 10 Downing Street, almost 50 years ago. There are other interesting parallels between the two. Callaghan took power at the height of Britain's dysfunctional "sick man of Europe" phase between the late 1960s and 70s, a label brought about by the poor state of its economy.

Margaret Thatcher followed Callaghan as prime minister. She is a Conservative Party hero, credited by many with turning the fortunes of the country around and defending it abroad. In August, Ms Truss said of the Thatcher era that "Britain was one of the first countries to really reform regulation and create privatised utilities – we did great things in the 1980s".

Ms Truss will be hoping she can shape the 2020s in a similar manner, and she will undoubtedly be thinking of the Iron Lady in these first, critical days of her premiership. If she can manage her incredibly difficult portfolio successfully she will get the same historic recognition.

Doing so, however, will require looking abroad at a time when it might be compelling to focus on home. The UK's domestic problems are, after all, in large part the product of a malfunctioning world.

Fortunately, Ms Truss has already demonstrated some capability when it comes to engaging with the world. She has been an advocate for a global Britain in the post-Brexit era and during her time as international trade minister important approaches were made for new trade deals.

Unfortunately, today's global agenda is far less about realising an optimistic future and far more about managing worsening crises. The Ukraine conflict requires negotiations between Ukraine and Russia as soon as possible, the green agenda must stay on track and tensions between the West and China should also be reduced.

The Middle East matters to Ms Truss's quest, too. Its stability is crucial for global stability, from energy security to the freedom of movement in its seas.

Ms Truss's predecessor, Boris Johnson, had many supporters abroad, not least in Ukraine where a street in the capital is now named after him. It was a different picture at home. His final days in office were riddled with accusations of mismanagement and misconduct.

The shape in which he found himself handing over power to Ms Truss should serve as a lesson in how to be a leader in unstable times. It is possible to be liked abroad, but it means little if your vision and conduct is poorly received at home. Ms Truss must seize the chance she now has to pursue a foreign policy that builds bridges and promotes peace abroad, and, while doing that, help ease Britain's domestic troubles.

After a long period of anticipation, and if final tests go well, the world's second blockchain Ethereum will probably transition from "proof of work" (PoW) to "proof of stake" (PoS) later this month. This means that transactions on the Ethereum blockchain will no longer be recorded by miners that spend a lot of computing power to prove they worked hard to verify transactions. After "the merge", transactions will be processed by validators, that have staked Ether (in other words, put collateral in escrow) that can be forfeited if it turns out they were acting in bad faith.

The discussion about the pros and cons of PoS vs PoW is almost as old as Bitcoin, and we can't represent all arguments here. What we're interested in, is that this transition to PoS may over time increase the acceptability of Ethereum, and all of the apps built on top of it, for policymakers and regulators. This in turn may provide a boost to traditional financial institutions' willingness to develop Ethereum-based services.

Ethereum is not the first blockchain to adopt PoS. But it is generally considered the most important blockchain after Bitcoin, and Ethereum is a key building block of the decentralised finance universe. Moreover, Ethereum won't go down for scheduled maintenance over the weekend to upgrade the network. Instead, as ethereum.org describes it, the new PoS-engine will be hot-swapped in mid-flight. A flight which hosts a variety of apps, tokens and platforms. What could go wrong?

Indeed, while the Ethereum community has spent a lot of time testing PoS (the PoS testing ground called "beacon chain" has been running since December 2020), implementing such a fundamental upgrade while the network keeps running, is ambitious. As anyone who has ever tried to quickly upgrade the operating system on their computer will know, there are almost always unexpected hiccups that end up taking much more time than anticipated. We expect leading Ethereum developers to be pulling all-nighters glued to their screens during the upgrade.

Another question during the upgrade is how Ethereum miners will respond. They have invested in dedicated hardware, typically GPUs, that can no longer be used for mining Ethereum after the upgrade to PoS. Some miners may decide to continue the PoW-based blockchain, creating a "fork". Such a duplication of the blockchain with all its tokens creates a variety of problems e.g. for exchanges and traders. Luckily, the crypto community has gained experience managing such forks over the years.

Describing all these challenges, you may start to wonder why Ethereum embarked on this project at all. Apart from improved scalability, the main reason is a drastic reduction in electricity consumption. Ethereum.org claims a 99.95% reduction in electricity consumption following the switch to PoS.

An important non-technical consequence of this great reduction in electricity need is that it may render Ethereum more palatable to policymakers and regulators. When the European Parliament discussed the EU's incoming Markets in Crypto Assets Regulation earlier this year, sustainability was an important topic. Policymakers are uncomfortable with the PoW consensus mechanism's high electricity use. To be sure, the pros and cons of PoW vs PoS are food for a fundamental and often heated debate, which has many more nuances than the –admittedly impressive– kWh figures suggest. We cannot do justice to this debate in this short piece. It is clear though that the switch to PoS removes power consumption as a problem for regulators. This, in turn, removes one stumbling block for traditional financial institutions and other companies to offer Ethereum-based services, although other obstacles may remain.

So what's not to like about PoS? Apart from migration risks, PoS has its own challenges. For example, its code is much more complex than PoW. This may create new vulnerabilities. Hackers will certainly be exploring the new infrastructure for flaws. Another issue is that PoS creates a new form of inequality. With PoW, there once was a sense that everybody can join in and start mining. With PoS, in contrast, the "wealthy" can stake a lot of Ethereum and reap most of the validation rewards, further increasing their wealth. Yet the reality is more nuanced. PoS staking pools do provide opportunities for those with less Ether to spare. And with PoW on the other hand, the days that an old laptop was sufficient for mining, are long gone.

Some people worry about increased possibilities for censorship by PoS validators. Yet in principle, PoW miners could apply censorship as well. It is also not evident that PoS will lead to a more concentrated validator landscape than PoW, where miners have been cooperating in mining pools for a long time. In the end, it's less the technology that makes the difference, but rather the attitude –and regulation– of those using it. More generally, there is a tradeoff between censorship resistance and the application of anti-money laundering and sanctions policies which are required to render cryptocurrency acceptable to regulators. In the end, compromises need to be struck here.

Ethereum's upcoming migration from PoW to PoS may be the biggest planned event in cryptoland this year. The migration itself and its aftermath carry risks, and will be closely watched within the crypto community. A successful migration would be a compliment to the Ethereum community's ability to manage big events. It would also remove an important obstacle to acceptability of Ethereum to regulators and hence development of Ethereum-based services by traditional financial institutions.

The state of the Nord Stream project is a good symbol of the critical danger that the war in Ukraine poses to the world, particularly Europe, and the pace at which the crisis is escalating.

Before the war, the programme was one of the most important of its kind globally. First, there was Nord Stream 1, a 1,200-kilometre gas pipeline that stretches from the west of Russia to north-eastern Germany. Then there was Nord Stream 2, a second pipeline that also goes through the Baltic Sea and into Germany. Construction finished last September, but it has never been, and now probably never will be, put to use.

At the outbreak of the Ukraine war German Chancellor Olaf Scholz who many Russia hawks feared would be too emollient towards the Kremlin, announced the scrapping of Nord Stream 2. On Friday, an even more dramatic decision was taken by Gazprom, Russia's majority state-owned energy company, after it announced that Nord Stream 1 would be switched off indefinitely.

It will be interpreted by many as a further escalation at an already critical point. It was not the only one that day. It came mere hours after G7 countries agreed a price cap on Russian energy.

Everything must be done to stop this new wave of tensions escalating. Nord Stream might appear over, but its legacy is not. Some analysts postulate that Russia and the West are at war in an economic sense. This does not have to be the case, and there is still room for diplomacy. It must be seized, most importantly for the sake of Ukrainians, who are enduring terrible suffering, whether physically or through the mental trauma of war and being forced to flee home. Around 7 million Ukrainian refugees have been registered across Europe.

It must also be seized for the economic, political and security wellbeing of Europe. Across the continent energy bills are set to soar to potentially catastrophic levels, particularly as winter approaches, with the poorest set to suffer the most. Ukrainian President Volodymyr Zelenskyy has nonetheless declared that energy troubles are a small price to pay if it means averting a "fully fledged world war". Many European households may not see their incredibly high bills that way.

Western governments are scrambling for solutions. France has announced that it will re-start 32 dormant nuclear power stations and Germany is firing up previously mothballed coal-fired plants, adding to fears that the conflict is unravelling climate goals. In May, the US presidential climate envoy, John Kerry, said that if the conflict drags on, international targets to limit global warming to below 1.5C compared to pre-industrial levels will become harder to meet.

Russia, too, would gain from a diplomatic solution. Western sanctions are hurting its economy and the prospects of its young people. Accidents and miscalculations could endanger the lives of Russians close to the fighting, and for both nations and even the wider continent fighting at the Zaporizhzhia power plant risks a nuclear disaster.

From the battlefield to beyond, the war has given plenty of dramatic headlines. What is happening with Nord Stream 1 could well turn out to be one of the most consequential. While it might seem hard to picture in the thick of the crisis, this could be a moment to kickstart a genuine diplomatic process to end the conflict. A swift conclusion is key. It would stop terrible violence and suffering, secure international food supplies and stabilise the global economy more generally.

Or, the indefinite suspension of Nord Stream 1 could be the moment things start to get even worse, the most terrible scenario being escalation into a conflict that drags in other states. Disruption to the pipeline is traumatic. But nothing is more traumatic than war, and however bitter feelings might be after Friday's announcement, securing peace must still remain the priority. Only a diplomatic resolution can do that.