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China has built new military facilities on a disputed reef in the South China Sea, suggesting President Donald Trump did not convince China to change its maritime course during his summit in April with Chinese president Xi Jinping. China has built four new missile shelters on the reef, according to satellite images provided to the Financial Times by the Asia Maritime Transparency Initiative.

Around the world, the global bond market sell-off has deepened and spread to equities after recent hawkish speeches from central bank heads sparked fears that the post-crisis period of easy monetary policy is nearing its end. Those fears hit government bonds of most major countries hard this week, pushing borrowing costs sharply higher across the world and setting the stage for gold’s first monthly decline of the year. (FT)

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In the news

Chinese bank sanctions over North Korea
The Trump administration has accused a Chinese bank, Bank of Dandong, of helping North Korea launder money. The administration cut the bank off from the US financial system in a big move aimed at convincing China to put more pressure on Pyongyang. (FT)

Walgreens scraps acquisition
Walgreens Boots Alliance was forced to halt its $17.2bn acquisition of rival Rite Aid because of regulatory concerns. Instead, it agreed on a deal on Thursday to purchase more than 2,000 Rite Aid stores, about half of Rite Aid’s total stores. (FT)

Merkel challenges Trump
At a speech to the German parliament Angela Merkel has thrown down the gauntlet to Donald Trump and pledged to fight at next week’s G20 summit for free trade, international co-operation and the Paris climate change accord. Her fighting talk shows that the summit may struggle to reach consensus on a range of issues. (FT)

Private equity upswing
Private equity buyouts have hit the highest level since before the financial crisis, a decade ago. The volume of deals involving private equity, which has climbed 29 per cent to $143.7 in the first half of 2017, has come as fund managers have come under intense pressure from investors to deploy some of the record amount of capital they hold. (FT)

‘Mr President, please grow up’
President Trump attacked MSNBC host Mika Brzezinski on Twitter, describing her as “low I.Q. Crazy” and saying she had been “bleeding badly from a facelift”. The crude insult, reminiscent of his attacks on female TV host Megyn Kelly, made many lawmakers from both parties recoil, calling Mr Trump’s language “vile”, “divisive” and “unpresidential”. (FT, WaPo)

Xi backs ‘One Country, Two Systems’
The Chinese president has arrived in Hong Kong for a visit celebrating the 20th anniversary of the former British colony’s handover, pledging to ensure “One Country, Two Systems”. But fears that Beijing is encroaching on autonomy and freedoms, especially from many of its younger residents who no longer feel Chinese, are heightened by the detention of pro-democracy campaigners ahead of the visit. There’s another big anniversary this week: it is 20 years since the Southeast Asian financial crisis. (FT, CNN)

Vatican finance chief charged
One of Pope Francis’s most senior advisers, Cardinal George Pell, has been charged with multiple sex offences by Australian police. The 76-year-old has taken a leave of absence to return to Australia from Rome, where he had been tasked by the Pope with cleaning up the Vatican’s finances. (FT)

The day ahead

Pension ballot closes
The Unite union will close a ballot on an improved pension deal for the 16,000 employees of the Nuclear Decommissioning Authority.

Keep up with the important business, economic and political stories in the coming days with the FT’s Week Ahead.

What we’re reading

Spain, divided
The regional government of Catalan, the region surrounding Barcelona that has been a part of Spain for centuries, has vowed to hold a referendum on secession in October. The leaders of the growing secession movement intend to show Madrid and the world that the people from the region deserve a state of their own. (FT)

The anatomy of the Grenfell tragedy
The disaster in the London tower block highlights the growing social divisions in the UK following four decades of deregulation, privatisation and questionable housing policy. (FT)

The weird world of remote PAs
They are typically young and female and organise professional lives from afar. But do the advances in technology mean that the rise of the remote personal assistant is over before it begins? (FT)

No Trump in Europe
The FT’s Simon Kuper argues that there will never be a Donald Trump equivalent in Europe. Polarisation, extreme inequality, fake news, and plutocracy are not problems plaguing all of the west to the same degree. Instead, Kuper argues, those issues mainly affect the US, which more closely resembles Brazil or Argentina than Germany or Spain. (FT)

Climate change hits the US south
A new study in the journal Science found that climate change effects would hit hardest in the south, causing projected GDP losses of 10-20 per cent or more in many southern counties. (NYT)

Venezuela, from farce to tragedy
The outlandish helicopter attack in Caracas on Tuesday — when a B-movie actor supposedly hijacked a helicopter and fired shots at government buildings — has quickly turned from a farce to a tragedy now that Venezuelan leader Nicolás Maduro has used the supposed attack as grounds for a crackdown. (FT)

Video of the day

Martin Wolf on the rise of populism Chief economics commentator Martin Wolf explores with comment editor Jonathan Derbyshire the causes of populism today, cultural and economic, and they also discuss why populism has become more potent nearly a decade after the financial crisis. (FT)

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