Economy

NEW YORK (Reuters) -Four accounts on crypto-based prediction market Polymarket that placed large bets on former President Donald Trump winning the 2024 election, and have been the subject of much online speculation, are owned by non-Americans or a non-American, according to a source familiar with the matter on Friday.Opinion polls indicate a likely close match between Trump and Vice President Kamala Harris in the vote on Nov. 5. However, the odds have diverged on Polymarket, with Trump pulling strongly ahead at a 60% chance of winning versus Harris on 40%.The trade was driven by four accounts that placed more than $30 million worth of bets, according to the source, confirming an earlier story in the Wall Street Journal.Political pundits and social media users have questioned whether specific high-profile Americans could be behind the moves.But Polymarket does not allow Americans to make U.S. election bets on the exchange, and the source confirmed that Polymarket’s users are international. The source said the company certifies all of its large traders to ensure they are not logging in via VPNs to obscure which country they are in.Reuters could not immediately determine if the four accounts represent a single trader or many.Given the size and impact of the bets, Polymarket is investigating the activity in partnership with outside experts, the person said, confirming the Wall Street Journal’s reporting. A $30 million bet on Trump on Polymarket would be equivalent to about 1% of trading volume on the platform related to the presidential race.Americans have faced steep restrictions on betting on U.S. elections online. The Commodity Futures Trading Commission has previously rejected applications to offer contracts or derivatives that allow Americans to bet on elections.CFTC Chairman Rostin Behnam said in a September 2023 statement that such event contracts would effectively turn the agency into an “election cop,” a duty for which the CFTC lacked a mandate.”It makes sense for the CFTC to have authority to combat fraud, manipulation, and false reporting in underlying commodity markets,” Behnam said at the time. “But it is impractical for the CFTC to combat them in the underlying market here – a political contest.”Proponents argued the contracts could be a valuable new financial tool to provide insight on the future.In November 2023, Kalshi, another betting exchange, sued the CFTC over its ban on U.S. election betting. A federal appeals court sided with Kalshi on Oct. 2, paving the way for Americans to start trading on political races just one month ahead of the election.Kalshi has Trump at 57% and Harris at 43%.In an emailed statement, Kalshi said: “Our stance on Trump’s surge in odds is that it’s all part of normal market activity. Trump is simply gaining popularity, and prediction markets aggregate information from a wider audience at a faster pace than polls.” The CFTC did not respond to requests for comment. More

In the note, the analysts say that with recent positive economic data pushing the 10-year Treasury yield into what they define as the “Soft Landing Zone,” investors may see stabilization in yields even as the economy avoids recession.The “Soft Landing Zone” refers to a trading range between 3.80% and 4.83% for the 10-year yield. This range captures scenarios where inflation trends toward the Federal Reserve’s 2% target, and unemployment stays near its current levels, reflecting neither overheating nor severe economic contraction. As BCA’s analysts note, in such a scenario, the Fed’s easing of monetary policy would continue, but without a full-blown recession requiring aggressive cuts.Looking ahead over the next year, BCA forecasts that Treasury yields will gradually decline if the economy follows the Fed’s projections. Specifically, the 2-year Treasury yield could fall to 3.33%, the 5-year to 3.52%, and the 10-year to 3.84%, with the 30-year settling around 4.27%. These projections assume moderate easing by the Fed, with the federal funds rate drifting down to 3.625% by the end of the period.A soft landing would provide some relief to bondholders by reducing the upward pressure on yields, which had climbed amid inflation concerns and uncertainty about the Fed’s trajectory. This scenario offers a favorable environment for bond investors, especially those maintaining positions with longer duration. As per BCA, positioning portfolios above the benchmark duration and holding steepener trades (such as the 2-year/10-year Treasury curve) could be advantageous in anticipation of a soft-landing outcome.However, the note underscores that risks remain. If the Fed adopts a hawkish approach even in a soft-landing environment—perhaps by pausing rate cuts after an initial easing—the upper end of the yield curve could remain elevated. In that case, the 10-year yield might touch 4.63%, and the 30-year yield could reach 4.96%, near the boundaries of what BCA refers to as the “Inflation Scare Zone.”The analysts stress on the importance of being prepared for different outcomes. While they assign a low probability to an inflation resurgence, they warn that any sign of persistent inflation could push yields higher. Similarly, if the labor market weakens more than expected, Treasury yields might fall into the “Recession Scare Zone,” where deeper Fed cuts would be necessary. More

While inflation has retreated in many economies, the bank argues that now is not the time to become complacent. Recent developments such as faster-than-expected central bank easing, rising commodity prices, and persistent inflationary pressures point to the possibility of higher inflation ahead.This has already been reflected in the markets, with the US 5-year inflation swap posting its largest rise since early 2023 and United States 10-Year yields climbing more than 50 basis points in just a few weeks.In a note released Monday, Deutsche Bank outlined five key reasons why inflation risks are still rising.1) Faster-than-expected monetary easing: Deutsche Bank highlights that major central banks, including the Federal Reserve and the European Central Bank (ECB), have been more aggressive in easing monetary policy than expected.The Fed, for instance, cut rates by 50 basis points in September, and the ECB is expected to follow suit in October.”Although these decisions are understandable in the context of lower headline inflation, historical experience says that this is precisely the time to be cautious on inflation, given policy is becoming less restrictive.”2) Geopolitical tensions driving commodity prices higher: The recent uptick in commodity prices, driven by the geopolitical crisis in the Middle East and China’s economic stimulus, has also contributed to mounting inflation risks.Brent crude prices, for example, surged after renewed missile attacks between Iran and Israel, while China’s stimulus measures have boosted the prices of industrial metals like copper.As a result, “this uptick in commodity prices has taken away a source of disinflationary pressure that had been in place over the summer,” Deutsche Bank notes.3) Stronger-than-expected US economic data: Contrary to fears of a slowdown, recent US economic data has been stronger than anticipated. Nonfarm payrolls jumped by 254,000 in September, while GDP growth is projected at 3.2% for Q3.“Much as the stronger news on growth is welcome, it also means that economic demand and inflation is likely to be stronger than it would otherwise have been,” Deutsche Bank’s team cautions.4) Persistent core inflation pressures: Last week’s US CPI report showed that core inflation was running at its fastest pace in six months, rising by 0.31%.More troubling is the rise in the “sticky” categories of inflation, which Deutsche strategists point out could lead to inflation staying higher for longer.For example, the Atlanta Fed’s ‘sticky CPI’ measure saw a 0.32% gain, the sharpest in five months.5) Rising money supply growth: Lastly, money supply growth has also picked up recently, with M2 in the US growing by 2% year-on-year in August, the highest rate since September 2022.In the Euro Area, M3 money supply growth hit 2.9%, the highest since January 2023.“Although money supply growth is not the only determinant of inflation and it is rising from a low level, we saw in the post-pandemic period that it was a strong leading indicator that offered an advance signal that inflation could move higher again,” strategists said.In sum, even though inflation has eased to target levels or below in some regions, the recent shift toward monetary easing means investors should stay vigilant, Deutsche Bank said in the note.Geopolitical tensions and rising commodity prices could push inflation higher again. Over the past six weeks, growing concerns among investors highlighted the increasing risk of inflation, which could have significant market implications if it resurfaces. More

As per analysts at BCA Research, despite the recent positive headlines around job creation, it’s too early to declare a decisive turning point in the labor market’s trajectory. “We assign a 60% chance that the US will enter a recession over the next 12 months, with the downturn likely to begin in the first half of 2025,” the analysts said.This cautious stance contrasts with the more optimistic projections held by many, reflecting a belief that the labor market’s apparent strength may not be as solid as it seems.Recent job reports, including a stronger-than-expected September payrolls figure, have spurred discussions of a soft landing—a scenario in which the U.S. economy slows down without tipping into recession. However, BCA cautions against reading too much into these gains.The note flags that while headline numbers suggest improvement, deeper scrutiny reveals anomalies, such as irregular seasonal adjustments and weak underlying trends like a declining workweek length and falling aggregate hours worked. These discrepancies suggest that the labor market could experience reversals in the months ahead.One of the critical distinctions BCA analysts make is between coincident and leading labor indicators. While payroll growth and unemployment rates—a focus of many reports—remain strong, these are coincident indicators, meaning they often hold steady even as the economy starts to contract. Leading indicators, however, paint a more concerning picture. BCA points to troubling signs, including weakening employment components of key purchasing manager indexes and a sharp decline in perceptions of job availability, suggesting labor market stress ahead​.Moreover, BCA flags that job openings—a crucial gauge of labor demand—remain an area of concern. Although official data from the Job Openings and Labor Turnover Survey showed a rise in August, the longer-term trend is one of softening. New job openings on platforms like Indeed have been on the decline, while hiring at large firms has cooled and temporary employment continues to shrink. These indicators suggest that while companies are not yet engaging in large-scale layoffs, they have become increasingly reluctant to hire, often a precursor to more severe labor market deterioration​.BCA underscores that the future of the labor market will largely hinge on consumer spending. Income growth, which has steadily decelerated, poses a risk. While disposable income increased by 3.1% year-on-year in August, wage growth has slowed, and the pool of available workers has almost fully reabsorbed those who left the workforce during the pandemic. Compounding this, high mortgage rates are likely to weaken the housing market further, curtailing residential investment—a reliable early indicator of economic downturns.In terms of broader economic implications, BCA is cautious about the prospect of a credit-driven spending boom. Despite recent increases in home equity loan activity, overall consumer credit growth has slowed, with delinquency rates rising across credit card and auto loans. Banks, in turn, have tightened lending standards, which is likely to suppress consumer spending further and amplify the slowdown in income growth. More

Mira Murati, former chief technology officer at OpenAI, is raising funds from venture capitalists for her new AI startup, according to sources familiar with the matter.The new company aims to build AI products based on proprietary models, said one of the sources who requested anonymity to discuss private matters. It is not clear if Murati will assume the CEO role at the new venture.A representative for Murati declined to comment.While the talks are in the early stages, Murati’s new venture could raise over $100 million given her reputation and the capital needed to train proprietary models, one of the sources said, cautioning that the figures have not been finalized.Barret Zoph, a prominent researcher who left OpenAI on the same day as Murati in late September, could also get involved in the new venture, the sources added. Zoph did not respond to requests for comment.The Information previously reported that Zoph is planning a new startup and that Murati has been recruiting OpenAI employees to join her new venture.Murati at OpenAI spent over six years spearheading transformative projects like ChatGPT and DALL-E. She was a key figure in OpenAI’s multibillion-dollar partnership with Microsoft (NASDAQ:MSFT), its largest financial backer.Murati’s meteoric rise at OpenAI has cemented her name as one of the most prominent executives in the fledgling field of artificial intelligence. Murati joined OpenAI in June 2018 and was promoted to CTO in May 2022, according to her LinkedIn profile. Prior to OpenAI, she worked at augmented reality startup Leap Motion and Tesla (NASDAQ:TSLA).She frequently appeared alongside OpenAI CEO Sam Altman as the public face of the ChatGPT maker. When OpenAI in May launched its GPT-4o model, which is capable of having realistic voice conversations, Murati led the presentation.Her abrupt resignation in late September marked the latest high-profile exit from the ChatGPT maker as the company undergoes major governance structure changes, including removing the control of the non-profit board. Murati, who briefly served as interim CEO last year when Altman was ousted by the non-profit board, cited a desire for personal exploration for her departure. Murati joins a growing list of former OpenAI executives launching startups, including rivals such as Anthropic and Safe Superintelligence. More

WASHINGTON (Reuters) -The U.S. budget deficit grew to $1.833 trillion for fiscal 2024, the highest outside of the COVID era, as interest on the federal debt exceeded $1 trillion for the first time and spending grew for the Social Security retirement program, health care and the military, the Treasury Department said on Friday.The deficit for the year ended Sept. 30 was up 8%, or $138 billion, from the $1.695 trillion recorded in fiscal 2023. It was the third-largest federal deficit in U.S. history, after the pandemic relief-driven deficits of $3.132 trillion in fiscal 2020 and $2.772 trillion in fiscal 2021.The fiscal 2023 deficit had been reduced by the reversal of $330 billion of costs associated with President Joe Biden’s student loan program after it was struck down by the U.S. Supreme Court. It would have topped $2 trillion without this anomaly.The sizable fiscal 2024 budget gap of 6.4% of gross domestic product, up from 6.2% a year earlier, could pose problems for Vice President Kamala Harris’ arguments ahead of the Nov. 5 presidential election that she would be a better fiscal steward than Republican opponent Donald Trump.A fiscal think-tank, the Committee for a Responsible Federal Budget, has estimated that Trump’s plans would pile up $7.5 trillion in new debt, more than twice the $3.5 trillion envisaged from Harris’ proposals.White House budget director Shalanda Young emphasized the strong growth in the U.S. economy and the Biden administration’s investments in clean energy, infrastructure and advanced manufacturing.”This Administration has done this while maintaining a commitment to fiscal responsibility by ensuring the wealthiest among us and large corporations pay their fair share and cutting wasteful spending on special interests,” Young said in a statement, referring to plans by Biden and Harris to raise taxes on these groups.U.S. receipts for the 2024 fiscal year hit a record $4.919 trillion, up 11%, or $479 billion, from a year earlier, as individual non-withheld and corporate tax collections grew. Fiscal 2024 outlays rose 10%, or $617 billion, to $6.752 trillion.INTEREST COSTSThe biggest driver of the year’s deficit was a 29% increase in interest costs for Treasury debt to $1.133 trillion due to a combination of higher interest rates and more debt to finance. The total exceeded outlays for the Medicare healthcare program for seniors and for defense spending.But a senior Treasury official said the interest costs as a share of GDP reached 3.93%, below the 1991 record of 4.69% but the highest percentage since 4.01% in December 1998.The weighted average interest rate on federal debt was 3.32% in September, up 35 basis points from a year earlier, but down from 3.35% from August, marking the first monthly decline since January 2022.Other drivers of increased outlays for the fiscal year included Social Security, up 7% to $1.520 trillion, Medicare, up 4% to $1.050 trillion, and military programs, up 6% to $826 billion.For September, the government reported a $64 billion surplus, compared to a $171 billion deficit in September 2023, but the improvement was largely due to calendar adjustments for benefit payments. Without these, there would have been a $16 billion deficit in September 2024.Reported receipts were a record for September at $528 billion, up 13% from a year earlier, while outlays were $463 billion, down 27% largely due to the calendar adjustments. More

“We think the market wobbles over November and December Fed rate cuts are overdone. November looks rock solid to us at present, and December looks strongly odds-on though necessarily not watertight with more time to accumulate data,” Evercore ISI analysts said in a Friday note.The Federal Reserve will likely cut rates in both November and December, analysts at Evercore ISI said in a Friday note, bringing the federal funds rate down to a range of 4.25% to 4.5%.The call for a November and December rate cut comes even as recent strong economic data, including retail sales and unemployment claims,  led some market participants to question whether the Fed is likely to pause at upcoming meetings.But Evercore ISI believes that the Fed is unlikely to swayed by the recent data as the central bank’s primary focus is on moving rates back to a “more neutral setting to maintain a robust labor market as inflation returns to target.”The current level of rates, meanwhile, remain at levels that continue to curb growth and inflation. Real rates remain significantly elevated compared with “mainstream views of what a neutral setting might look like even in the short run,” the analysts said.”So we think there is a strong bias to move steadily to cut twice more at successive meetings down to 4.25 to 4.5 per cent after December before considering slowing down,” they added.Looking ahead to 2025, Evercore ISI revised its growth forecast upward amid expectations for a boost from the carryover effect of increased fiscal resources and an expected rebound in credit growth.While the first leg of rate cuts this year is seemingly on a more certain footing, the second leg of rate cuts will be executed with more caution. “[T]he more nuanced judgments will come in the second leg from 4-4.5 per cent to 3-3.5 per cent, when the Fed will learn more about neutral and will have to factor in how to remain dynamically well positioned including with respect to Trump policy shocks if Trump wins,” the analysts said. More

The Biden administration rang up a budget topping $1.8 trillion in fiscal 2024, up more than 8% from the previous year and the third highest on record.
Interest expense for the year totaled $1.16 trillion, the first time that figure has topped the trillion-dollar level.

The U.S. Treasury building in Washington, D.C., on Aug. 15, 2023.
Nathan Howard | Bloomberg | Getty Images

The Biden administration rang up a budget deficit topping $1.8 trillion in fiscal 2024, up more than 8% from the previous year and the third highest on record, the Treasury Department said Friday.
Even with a modest surplus in September, the shortfall totaled $1.833 trillion, $138 billion higher than a year ago. The only years the U.S. has seen a great deficit were 2020 and 2021 when the government poured trillions into spending associated with the Covid-19 pandemic.

The deficit came despite record receipts of $4.9 trillion, which fell well short of outlays of $6.75 trillion.
Government debt has swelled to $35.7 trillion, an increase of $2.3 trillion from the end of fiscal 2023.
One aggravating factor for the debt and deficit picture has been high interest rates from the Federal Reserve’s series of hikes to fight inflation.
Interest expense for the year totaled $1.16 trillion, the first time that figure has topped the trillion-dollar level. Net of interest earned on the government’s investments, the total was a record $882 billion, the third-largest outlay in the budget, outstripping all other items except Social Security and health care.
The average interest rate on all the government debt was 3.32% for 2024, up from 2.97% the previous year, a Treasury official said.

The government did run a surplus in September of $64.3 billion, the product in part of calendar effects that pushed benefit payments into August, which saw a $380 billion deficit, the biggest month of the year.
As a share of the total U.S. economy, the deficit is running above 6%, unusual historically during an expansion and well above the 3.7% historical average over the past 50 years, according to the Congressional Budget Office.
The CBO expects deficits to continue to rise, hitting $2.8 trillion by 2034. On the debt side, the office expects it to rise from the current level near 100% of GDP to 122% in 2034.

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