Aurelia Butler

WASHINGTON (Reuters) -The U.S. government has reimbursed auto dealers for more than $580 million in advance point-of-sale consumer electric vehicle (EV) tax credit payments since Jan. 1, the Treasury said on Friday.Prior to 2024, U.S. auto buyers could only take advantage of the new EV credit of up to $7,500 or the $4,000 used EV credit when they filed tax returns the following year.The Internal Revenue Service has received approximately 100,000 time of sale EV reports this year and paid more than $580 million in advance payments to dealers since Jan. 1, Treasury said.Starting Jan. 1, consumers can transfer the credits to a car dealer at the time of sale, effectively lowering the purchase price.Treasury said more than 85,000 of the time of sale tax reports were for new EVs, with over 90% of those including advance payments request for $7,500. More than 15,000 time of sale reports were for used EVs, with about 75% including advanced payments requests for $4,000.Treasury spokesperson Haris Talwar said “demand is high four months into implementation of this new provision.”The Treasury issued guidelines in December aimed at weaning the U.S. EV supply chain away from China. The number of EV models qualifying for U.S. EV tax credits fell on Jan. 1 to 19 from 43 with some Tesla (NASDAQ:TSLA) Model 3s, Chevrolet Silverado EV, Ford (NYSE:F) Mustang Mach-E, Ford E-Transit vehicles among those losing credits.Since then, many have regained eligibility including the Volkswagen (ETR:VOWG_p) ID.4, Nissan (OTC:NSANY) Motor Leaf, GM’s Chevy Blazer EV and Cadillac Lyriq.Consumers must attest they meet income limits to qualify for the tax credit at time of purchase or they will need to repay the government when filing their taxes. For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals.The August 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models.It also created a used EV tax credit, lifted 200,000-vehicle manufacturer caps on credits, imposed income and vehicle price restrictions and extended credits to leased vehicles. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The dollar staged its strongest weekly performance since 2022 after higher than expected US inflation figures caused ripples through world markets.The US currency strengthened by 1.7 per cent against a basket of six currencies since Monday, its best weekly performance since September 2022, as traders reversed bets on early interest rate cuts by the Federal Reserve.The euro and sterling fell to their weakest levels against the dollar since November on Friday at $1.0642 and $1.245, respectively, while the yen sank to a 34-year low, before recovering to ¥153.28.Sterling’s decline also contributed to a 0.9 per cent rise in UK stocks on Friday, as the FTSE 100, whose constituent companies draw most of their revenues in dollars, ended the day’s trading just short of a record close.“The US is its own special case with very loose fiscal policy and now tight monetary policy, which is a recipe for a stronger dollar,” said Quentin Fitzsimmons, a senior portfolio manager at T Rowe Price. “The buzzword that is going through markets at the moment is divergence.”This week’s increase in US consumer price inflation — which hit a higher than expected 3.5 per cent for March — has prompted traders to increase bets that the Fed might deliver as few as one rate cut this year.That compares with expectations of as many as six quarter-point cuts at the start of January. On Thursday, the European Central Bank signalled it was still on course to deliver interest rate cuts in June. Pressure on the euro increased because of growing expectations that eurozone interest rates will fall ahead of those in the US. As of Friday afternoon, the single currency was down 1.8 per cent on the week, the biggest weekly decline since September 2022.“It looks like a happily divergent ECB has sent the euro weaker against the dollar,” said Chris Turner, head of global markets at ING.The shift in sentiment helped push the spread — or gap — between benchmark 10-year US and German government borrowing costs to 2.17 percentage points, its highest level since 2019.Speculation also rose that Sweden’s Riksbank could cut interest rates as soon as May after the country reported lower than expected inflation on Friday.Fears of an impending attack by Iran on Israel, in response to an air strike on the Islamic Republic’s consulate in Syria, may have also contributed to the dollar’s strong recent run, according to analysts. “Rising tensions between Iran and Israel can spill into even higher oil prices, all to the benefit of the dollar in the near term,” said Francesco Pesole, a currency analyst at ING.The dollar is considered a haven asset for investors during times of heightened geopolitical uncertainty. Sustained dollar strength could cause problems for countries looking to cut rates without undermining their currencies and accelerating price rises.The outlook has been complicated by a surge in oil prices, with Brent crude topping $92 a barrel for the first time since October on Friday amid rising fears of a widening conflict in the Middle East. “Other central banks clearly don’t want their currencies to weaken materially . . . what it means is effectively you will end up importing more inflation” said James Novotny, a portfolio manager at Jupiter Asset Management. Markets are betting that the ECB will deliver at least three quarter-point cuts by the end of the year, compared with two reductions for the Bank of England and only one or two for the Fed.Japan’s currency has suffered most from the rise in US rate expectations, which has pushed the yen to its weakest level since 1990, putting the finance ministry on red alert for a possible intervention. Masato Kanda, Japan’s vice-minister for finance for international affairs, told reporters on Thursday that authorities would not rule out any measures to address excessive moves in the exchange rate.Mark Dowding, chief investment officer at RBC BlueBay Asset Management, said the impact of any intervention would be expensive and temporary.  “The yen has been undermined by policy from the [Bank of Japan], which is too accommodative,” he said. “It looks like the yen remains vulnerable just because the policy gap remains achingly wide.” More

The embattled lender did not disclose the details of Pinto’s departure in its statement, which also included a slew of other executive appointments including that of Bao Nguyen, who will replace Patrick Quinn as the company’s general counsel.NYCB did not immediately respond to Reuters’ requests seeking more details.The appointment of Gifford, who has most recently worked at US Bancorp (NYSE:USB), follows two CEO changes at the bank that is now led by Joseph Otting.NYCB has been under pressure since January when it posted a surprise loss for the fourth quarter due to higher provisions tied to its exposure to the commercial real estate portfolio.It had also slashed its quarterly dividend by 70% to bolster capital to deal with stricter regulation that banks with assets of more than $100 billion are subject to. NYCB’s acquisition of Flagstar Bank in 2022 and some assets of failed Signature Bank (OTC:SBNY) last year pushed it above that threshold.The stock took a further beating in February when NYCB revealed a fourth-quarter loss that was more than 10 times what it previously stated and disclosed faults in its financial reporting in filings.The bank, however, raised $1 billion from investors including former U.S. Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital last month.Investment firms Hudson (NYSE:HUD) Bay Capital, Reverence Capital Partners, Citadel Global Equities, other institutional investors and certain members of the bank’s management also participated in the investment.NYCB shares are down about 72% so far this year.The bank on Friday also named Scott Shepherd as head of commercial real estate lending, and James Simons as special adviser to the CEO. More

WASHINGTON (Reuters) -The Inter-American Development Bank and World Bank on Friday issued separate reports on callable capital, the emergency capital pledged by governments but not paid in, that could help multilateral development banks expand their lending capacity.The reports followed months of technical studies and reverse stress tests that showed shareholders viewed their commitments to provide the emergency capital as legally binding, but saw a remote chance it would ever be needed.The IDB bank said it conducted reverse stress tests that showed all its shareholders considered obligations for callable capital legally binding, but a call on the emergency capital remained a “highly remote scenario.” The World Bank said its analysis showed the likelihood of a call was “extremely remote.”IDB said its senior management was confident that credit rating agencies would find the analysis useful in assessing the value of callable capital. The study is part of a major push by the IDB and other multilateral banks to expand the resources available to help poor countries fight climate change.The World Bank said its review of the procedures and governance of callable capital had provided more clarity and transparency about shareholders’ commitments, and could pave the way for changes to allow more lending.”This information will help rating agencies to better assess the value of callable capital to Multilateral Development Banks (MDBs),” it said. “Additional recognition by rating agencies of the value of callable capital could potentially allow the World Bank and other MDBs to expand financial capacity to tackle growing development needs and improve the lives of millions.”Similar reports on callable capital are being published by the African Development Bank, the Asian Development Bank and the European Bank for Reconstruction and Development.A senior U.S. Treasury official said the reports marked progress after months of hard work, with attention to turn now to increased engagement with the credit ratings agencies.“These statements should really give confidence that there’s potential scope to give more value to callable capital,” the official told Reuters. “This was meticulous, detailed work on the part of the MDBs and the shareholders were really happy.”U.S. Treasury Secretary Janet Yellen has asked the MDBs to prioritize incorporating “a prudent share” of callable capital into their capital adequacy frameworks, as part of broader reforms aimed at expanding funding options to help developing countries amid a worsening climate crisis.Senior executives at multilateral development banks (MDBs) have been meeting with top credit ratings agencies amid a broad push to expand their lending capacity and help countries brace for climate change and other challenges.Several studies say the World Bank and other MDBs could expand their lending capacity by hundreds of billions of dollars if the ratings agencies modified the allowance they make for callable capital, without jeopardizing their AAA credit ratings, which enable them to borrow at low rates and pass on the savings to developing countries. More

BRASILIA (Reuters) – Brazil’s government is preparing a new fiscal target for next year, aiming for a primary surplus equal to 0.1% of gross domestic product (GDP), two sources with direct knowledge of the matter told Reuters on Friday. Speaking on condition of anonymity because the discussions are private, the sources said there was no final decision, but the government intended to loosen the target from the 2025 surplus of 0.5% of GDP it had suggested last year.The government will set the new target in the budget guidelines bill, which must be sent to Congress by April 15. The Planning and Finance ministries said on Friday they had postponed the bill’s presentation to the press to Monday at 4:30 PM local time, shifting from an earlier morning announcement.The ministries did not immediately respond to a request for comment.According to both sources, the government is also expected to indicate that a primary surplus of 1% of GDP, previously projected to be achieved in 2026, will now be postponed to 2028.In practice, this extension will imply a longer period for stabilizing Brazil’s growing public debt. Considered the country’s primary solvency indicator, the gross debt rose to 75.5% of GDP in February, up from 71.8% a year earlier.Government officials had already suggested this week that the target should be relaxed, stressing the government would still seek an improvement compared to the official goal of eliminating the primary deficit this year.When President Luiz Inacio Lula da Silva introduced a fresh fiscal framework last year, constraining spending growth to 70% of revenue increases while permitting a minimum expansion of 0.6% and a maximum of 2.5% above inflation annually, it mandated the ongoing pursuit of primary budget targets alongside these regulations.The left-wing government also established a range for achieving the fiscal target, which, starting this year, has a tolerance margin of one-quarter of a percentage point on either side. More

Banks have reaped high profits in recent quarters as the Federal Reserve started raising interest rates in March 2022 to tame inflation, which boosted net interest income (NII), or the difference between what lenders earn on loans and pay out for deposits. But that positive effect has been waning, and the outlook for rates is now uncertain, particularly after March inflation data came in higher-than-expected, pushing out Wall Street’s forecasts for when the Fed starts rate cuts. “It’s certainly challenging these days to forecast NII, given all of the volatility that we’ve seen across a lot of the different data points, as well as some of the uncertainty that’s out there relative to how our clients are going to behave,” Wells Fargo’s finance chief Michael Santomassimo said.Wells Fargo’s NII fell 8% in the first quarter, hurt by higher interest rates on funding costs, including the impact of customers moving to higher yielding deposit products, as well as lower loan balances. The bank reiterated on Friday that its NII could fall 7% to 9% this year.”People know interest rates are uncertain but rate changes have a faster effect on banks than other sectors,” said JJ Kinahan, CEO of brokerage IG North America. JPMorgan Chase (NYSE:JPM) pointed to similar challenges in navigating the changing rates environment. Chief Financial Officer Jeremy Barnum said on an analyst call following earnings that while its current guidance was not meaningfully different from what it was in the fourth quarter, it was based on the “current yield curve, which is a little bit stale now.” JPM reported that NII rose 11% but it forecast that full-year income from interest payments would be below analysts’ expectations. JPM’s executives have warned for months that its surging NII was not sustainable.”You’ve got to be prepared for a range of outcomes, which we are,” said Jamie Dimon on the analyst call. “All of these questions about interest rates and yield curves… We don’t want to guess the outcome. I’ve never seen anyone actually positively predict a big inflection point in the economy literally in my life or in history.” Teddy Oakes, investment analyst at T. Rowe Price said there was little benefit to banks of “sticking your neck out early in the year” and being too optimistic on NII, as higher expectations had already been priced in.At Citigroup, net interest income increased 1% year-on-year. The bank forecast that NII excluding markets would be down modestly, as growth would be from noninterest-bearing revenue. Citi CFO Mark Mason said on a conference call that the fewer rate cuts expected this year don’t “have a material impact” on the bank’s guidance. “Notwithstanding a supportive higher-for-longer rate environment, early indications are that banks will mostly maintain their relatively downbeat 2024 net interest income guidance,” said Mark Narron, senior director at Fitch Ratings.Banks were generally positive on the economy, with Dimon saying the economy remained strong with people having excess money to spend. “There’s no doubt the Fed’s policy of very high short term rates impacts banks,” said Rick Meckler, partner, Cherry Lane Investments. “The surprise has always been that the economy hasn’t slowed, and so much of bank earnings are tied to economic conditions.” More

OTTAWA (Reuters) -Canada plans to ease a housing shortage by leasing public land to developers for construction of affordable houses under a plan unveiled by Prime Minister Justin Trudeau on Friday that aims to build nearly 3.9 million houses by 2031.The government said the land is underutilized. The property could potentially include abandoned industrial parks, sites of defunct government companies and schools with low enrollment. The plan still falls 1.2 million units short of what is needed from 2023 to 2030, according to national housing agency Canada Mortgage and Housing Corp.The Liberal government has announced a series of measures to address the housing crisis over the past two weeks, and the issue is expected to dominate next week’s federal budget.The flurry of activity follows a surge in housing and rental prices that has caused Trudeau’s Liberals to lag the Conservatives in opinion polls before an election that must be held by October 2025.”It is a plan that is actually going to make a difference in the lives of Canadians,” Trudeau told reporters in Vaughan, Ontario.Housing Minister Sean Fraser said other new measures include changes to a capital-cost tax structure that will encourage institutional builders to construct more homes, proposals to extend low-cost loans and combating on mortgage fraud that artificially inflates the cost of houses.Mike Moffatt of the Task Force for Housing and Climate, an independent think tank, said builders and other stakeholders would need to invest close to C$2 trillion ($1.5 trillion) to achieve the government’s 3.9 million homes target.”We are going to need to see more on the math, and we will need to see more on (the cost) in the budget. But I think overall we have seen some pretty significant reforms in today’s package,” he told the Canadian Broadcasting Corp.Rapid growth in Canada’s immigrant population has driven the housing shortage along with inflation and high interest rates.Housing in Canada is largely the responsibility of the 10 provinces and major municipalities. Ottawa, which has no direct role in construction, relies on policy measures and funding. ($1 = 1.3760 Canadian dollars) More

WASHINGTON (Reuters) -The International Monetary Fund’s executive board on Friday selected Bulgarian economist Kristalina Georgieva to serve as managing director for a second five-year term, starting on Oct. 1 this year, the global lender said.”The Board commended Ms. Georgieva’s strong and agile leadership during her term, navigating a series of major global shocks,” it said in a statement. Georgieva had been the only candidate for the job.European Union finance ministers last month endorsed Georgieva for a second term at the helm of the lender of last resort, virtually assuring her approval. Traditionally, European countries recommend the managing director of the IMF and the United States recommends the head of the World Bank.Georgieva said she was grateful to the board and honored to be selected for a second term, and said she looked forward to continuing to working with the IMF’s “exceptional” staff.“In recent years, the IMF has helped our member countries to navigate successive shocks, including the pandemic, war and conflicts, and a cost-of-living crisis,” she said. “We also stepped up our work on climate change, fragility and conflict, and the digital transition, in line with their increased significance for macroeconomic and financial stability, growth and employment.”U.S. Treasury Secretary Janet Yellen said she looked forward to working with Georgieva to strengthen the IMF’s support of low-income countries and support the broader membership through well-designed IMF lending programs.”The IMF plays an important and unique role in the international monetary system. Through its policy advice, lending, and capacity building, the IMF helps countries to restore macroeconomic stability and strengthen growth prospects,” she said.Georgieva is the second woman to head the IMF and the first person from an emerging market economy. She is the IMF’s 12th managing director since its founding in 1944. A self-described “eternal optimist”, Georgieva has led the lender through huge shocks to the global economy, from the outbreak of the COVID-19 pandemic just months after she took office to Russia’s invasion of Ukraine in February, 2022.She drew criticism inside and outside the IMF early on for her push to include climate change as a factor in surveillance reports on member countries’ economies and her focus on emerging market and developing economies.She has been instrumental in securing large loans for Ukraine, overseen a revamp of Argentina’s massive loan program and worked steadily to help China embrace sovereign debt restructurings.She also survived a personal challenge in 2021 when the IMF’s executive board expressed its full confidence in her after reviewing allegations that she pressured staff to alter data to favour China while working at the World Bank. More