Europe faces a winter without Russian gas
There is still no official explanation for what caused the explosions that ruptured the Nord Stream 1 and 2 pipelines, sending natural gas gurgling to the surface of the Baltic Sea. But that hasn’t stopped some E.U. officials from calling the episode an “act of sabotage,” with Prime Minister Mateusz Morawiecki of Poland publicly blaming Russia. Then last night, the pipelines’ operator, Gazprom, threatened to shut down the only pipeline that’s still pumping Russian gas to Western Europe.

The escalation caused natural gas prices to jump once again in Europe. The price of the benchmark Dutch TTF future contract for October has shot up by 20 percent over the past two trading sessions. Fearing further energy disruptions, investors sold off European stocks this morning, while the euro fell to a multidecade low against the dollar.

Here’s what we know about the apparent attack, and its effect on the energy markets:

The Baltic Sea is a highly monitored waterway. Swedish seismologists said they had detected underwater explosions on Monday, The Times’s Melissa Eddy reports. Ships were warned to steer clear of the waters as combustible gas was seen roiling patches of the sea. In response to the episode, Denmark and Norway announced increased security around their energy infrastructure.

It will have no immediate effect on European energy supplies. Nord Stream 2 never went into service, and Nord Stream 1 has been shut down since August. But the timing and location are worrying. The explosions occurred not far from the path of the Baltic Pipe project, a new gas transmission line that is slated to bring Norwegian gas to Poland and neighboring countries.

There’s good news. Eurozone countries have reduced their reliance on Russian gas to less than 10 percent from about 40 percent last winter, according to Zongqiang Luo, a senior analyst at Rystad Energy. He added that European countries were two months ahead of schedule in filling their gas storage reserves to above 80 percent — and, in some cases, above 90 percent.

But there’s also reason to worry If Gazprom follows through on its threat to shut down the third pipeline to Western Europe, businesses and homeowners would feel it. “Whether Europe can survive the winter will be highly dependent upon voluntary gas cuts,” Luo said. Any cuts to business output could leave the economic bloc more vulnerable to recession.

The Senate approves a stopgap funding measure. Legislation to keep the federal government running past Friday passed the chamber yesterday, staving off a shutdown threat. Key to its passage was dropping a provision to ease the building of energy projects that had been championed by Senator Joe Manchin, Democrat of West Virginia.

G.M. delays its return to the office. The carmaker backed away from a call for corporate workers to return to offices at least three days a week starting later this year, after pushback from employees, according to CNBC. G.M. said it wouldn’t mandate specific days for in-person attendance and wouldn’t require a return until next year.

Apple reportedly calls off production bumps for its new iPhones. The tech giant told suppliers to cancel plans to increase manufacturing of the iPhone 14 line, after expected heightened demand didn’t come to pass, Bloomberg reports. Rising inflation and fears of recession may be to blame. Shares were down nearly 4 percent in premarket trading this morning.

Fallout from Britain’s fiscal plans widens
The Bank of England moved this morning to calm markets as the pound and government bonds remained under pressure. Criticism of the government’s new fiscal policies — from both inside Britain and abroad — grew, and troubling consequences of the unpopular moves appear to multiply for Britons.

As of pixel time, the pound was below $1.06, while prices in British shops hit their highest level since at least 2005.

The Bank of England suggested it may need to sharply raise interest rates, to counteract any inflation arising from the government’s tax cuts and increased spending. Such policy would have “significant market consequences,” the central bank’s chief economist said yesterday. That suggests the Bank of England will make a huge hike in early November.

In the interim, the bank said today it would temporarily buy longer-dated government bonds, while delaying sales of its existing holdings, in an effort to tame soaring yields.

The I.M.F. sharply criticized the British government’s plans. In a rare rebuke, the lender urged Prime Minister Liz Truss to “re-evaluate” what it called an “untargeted” plan that risked stoking inflation. The credit ratings agency Moody’s offered similar criticism, though it held off on changing Britain’s debt rating.

The housing market is spooked. Economists now expect average mortgage rates to surpass 6 percent next year. Many lenders have temporarily suspended new mortgage offers or withdrawn existing ones, leading some to worry about a crash in housing prices and sales. Credit Suisse analysts said house prices could “easily” fall as much as 15 percent.

It’s unclear whether the Truss government will change course. Britain’s chancellor of the Exchequer, Kwasi Kwarteng, is set to meet with top bank executives today to discuss the fiscal plans. In meetings with other business leaders, Kwarteng professed confidence in the policy moves, though he added that the government would maintain “fiscal discipline.” Growing unease among lawmakers in the governing Conservative Party may force a shift, however, as polling shows the Tories falling behind the opposition Labour Party.