Aurelia Butler

(Reuters) – Wells Fargo (NYSE:WFC) expects steeper rate hikes by the Federal Reserve due to resiliency of the U.S. economy and the central bank’s increased resolve to wring out inflation, the Wall Street bank’s economists said in a note on Tuesday.They had earlier forecast a 100-basis-point hike between now and early next year, but now expect the Federal Open Market Committee (FOMC) to raise rates by about 175 bps.The Fed has aggressively hiked interest rates by 300 basis points so far this year and sees its rate hiking cycle ending 2023 at 4.50%-4.75% as it battles to quell the highest bout of inflation since the 1980s.The analysts expect the target range to hit 4.75%-5.00% by the first quarter of 2023, including a 75 bps hike at the Nov. 2 meeting and a 50 bps raise at the Dec. 14 policy meeting.”The economy is showing signs of resiliency, which will necessitate more monetary tightening to slow growth sufficiently to bring inflation back toward the Fed’s target of 2%,” said the analysts, led by chief economist Jay Bryson.”Our updated forecast for the fed funds rate also reflects the Fed’s apparent willingness to do “whatever it takes” to rein in inflation.” Fed funds futures imply a 70% chance of a 75 bps hike in November and a peak around 4.5% in the benchmark rate in early 2023. [FEDWATCH]Last week, Goldman Sachs (NYSE:GS), Barclays (LON:BARC) and a bunch of investment banks also raised their estimates for U.S. policy rates following Fed’s hawkish message on Sept. 21.The FOMC will not cut rates at the first sign of economic weakness, analysts at Wells Fargo added. They expect a U-turn in Fed’s policy only towards the end of next year. More

The company’s shares jumped by 10% to 15.74 euros in Amsterdam shortly after the announcement.Just Eat said in a statement it would have positive earnings before interest, taxes, depreciation and amortisation (EBITDA) for the second half of the year, compared to an equivalent loss of 134 million euros in the same period of 2021.It had previously guided for a negative margin on the gross transaction value (GTV) on its platform for the full year. Just Eat said it had made “significant progress” in improving revenue per order and cutting delivery and overhead costs, with managers expecting the company to become profitable “earlier than initially anticipated”.However, it cut its full-year GTV growth forecast to the low single digits from the mid-single digits, citing macroeconomic conditions and foreign exchange volatility.Just Eat is due to publish a trading update for the third quarter on Oct. 19. More

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, surged 1.3% last month, the Commerce Department said on Tuesday. These so-called core capital goods orders gained 0.7% in July. The data is not adjusted for inflation.Economists polled by Reuters had forecast core capital goods orders rising 0.2%. Core capital goods shipments rose 0.3% after climbing 0.6% in July. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.Data this month showed production at U.S. factories barely rose in August amid the Federal Reserve’s aggressive monetary policy tightening to fight inflation. The U.S. central bank last week raised its policy interest rate by 75 basis points, its third straight increase of that size. It signaled more large increases to come this year. Business spending on equipment contracted by the most in two years in the second quarter. More

BUDAPEST (Reuters) – The National Bank of Hungary (NBH) raised its base rate by a larger-than-expected 125 basis points to 13% on Tuesday, with the bank now looking to chart an end to a more than one-year-long tightening cycle amid a slowing economy.Central European policymakers are seeking to end a cycle of interest rate hikes running since last year even as inflationary pressures remain and the world’s major central banks keep pursuing higher rates. Deputy Governor Barnabas Virag said last week that the NBH, which has raised its base rate by more than 1,200 bps since June 2021 to the highest level in central Europe, could consider ending its rate rise cycle after Tuesday’s meeting.By 1219 GMT, the forint, central Europe’s worst-performing unit with a 9% loss versus the euro this year alone, firmed to 406.5 per euro from 407.85 just before the announcement.Governor Gyorgy Matolcsy will hold a news conference at 1300 GMT, when the bank also publishes a quarterly update to its economic forecasts.”It is likely the end of the rate hike cycle,” Peter Virovacz, an analyst at ING in Budapest said. “The question is whether this is a halt – or a just a pause in rate hikes, leaving the door open to potential further tightening.”Economists polled by Reuters last week forecast the base rate rising to 14% by the end of this year.The 125 bps increase brought Hungary’s benchmark to its highest since the turn of the century, with inflation on track to accelerate further from last month’s 15.6% pace after the government curbed a years-long cap on household utility bills.Earlier this month, Prime Minister Viktor Orban’s government extended price caps on fuels and basic foodstuffs by three months until the end of the year in a bid to shield households from soaring costs.Even with the price caps in place, however, analysts polled by Reuters see headline inflation averaging 13.6% this year, rising to 13.95% in 2023 before a retreat to 4.3% by 2024. More

WASHINGTON (Reuters) -The U.S. Senate will take an initial vote on a stopgap spending measure on Tuesday to keep federal agencies running past the end of this week, while Congress continues to negotiate bills to fund the government through the next fiscal year.President Joe Biden’s Democrats control both chambers of Congress and are expected to avoid an embarrassing partial government shutdown just six weeks before the Nov. 8 midterm elections, when control of Congress will be at stake.The bill would set $12.3 billion in new funding to help Ukraine turn back Russia’s invasion, House Appropriations Committee Chairwoman Rosa DeLaura said in a statement.This includes new military and economic assistance. In addition, the measure authorizes Biden to direct the drawdown of up to $3.7 billion for the transfer to Ukraine of excess weapons from U.S. stocks.In early September, Biden requested $11.7 billion in military and economic aid.Congress has resorted to this kind of last-minute temporary spending bill in 43 out of the past 46 years due to its failure to approve full-year appropriations in time for the Oct. 1 start of a fiscal year, according to a government study. A Tuesday evening Senate procedural vote is designed to speed action once Democrats and Republicans put the finishing touches on legislation.MANCHIN’S PERMITTING BILL A BARRIERThe first vote’s outcome was unclear because of a fight over an add-on by Democratic Senator Joe Manchin, a key swing vote who pressed to include an unrelated measure to speed up the government’s permitting process for energy projects. The proposed legislation includes permitting reform provisions and directs $250 million from the recently passed Inflation Reduction Act to “improve and accelerate reviews for designated projects.”Senate Minority Leader Mitch McConnell urged his fellow Republicans to vote against the temporary funding bill because of the Manchin provision, Politico reported. A McConnell aide had no immediate comment.Some Democrats and environmentalists also are opposed, fearing it would spark more development of fossil fuel projects at a time when the effects of climate change from carbon emissions are accelerating. Republicans have been angry at Manchin since he helped Democrats pass a bill this summer addressing climate change and lowering some healthcare costs.SPENDING BILL STILL EXPECTED TO PASSEven if Tuesday’s procedural vote fails, House and Senate leaders are expected to switch gears to promptly pass the spending bill by their Friday midnight deadline.That is when government agencies run out of money with Saturday’s start of a new fiscal year.Also included is a five-year renewal of Food and Drug Administration user fees being collected from drug and medical device companies to review their products and determine whether they are safe and effective, the bill summary showed.The law authorizing the collection of fees expires on Friday.The last time Congress allowed funding to lapse was in December 2018, when Democrats balked at paying for then-President Donald Trump’s U.S.-Mexico border wall. Following a record, 35-day impasse, Trump found ways to partially circumvent Congress, but the wall never was completed. More