Economy

NEW YORK (Reuters) – Bank of America’s bonus pool for investment bankers will probably rise 10% for last year, a source familiar with the matter told Reuters.While the average increase will be 10%, some investment bankers will get smaller payouts in the mid-to-high single digits, while other top performers would exceed the 10% range, two other sources told Reuters. The bonuses will be paid out in February after the bank announces its fourth-quarter earnings on Jan. 16, one of the sources said. Global banks have benefited from an increase in dealmaking last year led by mergers, acquisitions, and a surge of underwriting for bonds and equities.Bloomberg earlier reported on the BofA increases.BofA Securities ranked third on the global deals for investment banking fees in the fourth quarter, earning $1.4 billion in revenue, up sharply from $958 million in same period in 2023, according to Dealogic data. Compensation consultancy Johnson Associates said in November that Wall Street firms are expected to pay heftier bonuses for 2024, the first increase since a bumper year in 2021.Payouts will probably rise after financiers benefited from several factors in recent months: a recovery in transactions, the Federal Reserve cutting interest rates and equity markets surging to record highs, said the consultancy’s founder, Alan Johnson. More

SINGAPORE (Reuters) – The dollar looked set to extend its longest weekly winning streak in over a year on Friday, underpinned by rising bond yields and expectations of another strong set of U.S. jobs numbers.The dollar has gained 0.5% on the yen this week to buy 158.03 yen and added more than 1% on an ailing British pound, which was battered to a 14-month low in tandem with a selloff in gilts and concern about British finances.The dollar is set for a broadly steady week on the euro, which buys $1.0926 and it has notched small gains on the Australian and New Zealand dollars. [AUD/]The dollar index is set for a sixth consecutive weekly gain, its longest run since an 11-week streak in 2023 as the U.S. economy continues to seem strong in contrast with weaknesses elsewhere.The index was steady in the Asia morning on Friday for a 0.25% weekly rise to 109.18.”We doubt the dollar needs to hand back much of its recent gains,” said Chris Turner, global head of markets at ING, noting a shakeout in sterling long positions and risks to the upside for the dollar from U.S. jobs data due later in the day.”Despite the risk of profit-taking, (the dollar index) found good support under 108 earlier this week.”Sterling was last a fraction weaker at $1.2295, having touched a 14-month low of $1.2239 earlier in the week. The Australian and New Zealand dollars are huddled near multi-year lows, with the Aussie – last at $0.6190 – having come within a whisker of breaking a 2022 low of $0.6170.The New Zealand dollar is also testing its 2022 low of $0.5512 and was last at $0.5594.PAYROLLSU.S. non-farm payrolls data is expected to show 150,000 jobs were added in December, with unemployment holding at 4.2%.A hint of anything much stronger would add to the case for fewer Federal Reserve rate cuts and may set off another round of selling in jittery bond markets.Overnight Philadelphia Fed President Patrick Harker said he expects the U.S. central bank to cut interest rates, but added that an imminent move down isn’t needed.Markets have already scaled back expectations to around 40 basis points of U.S. rate cuts for 2025, while concerns about President-elect Donald Trump’s potentially inflationary agenda have helped drive up longer-term yields.Ten-year Treasury yields have climbed nearly 9 basis points this week to 4.68% and are up 96 bps since mid September. [US/]Ten-year gilt yields are up 22 bps this week to 4.805%. [GB/]Unusually, the ructions in the bond market seem to have been felt by cryptocurrencies, with bitcoin down 5.7% on the dollar through the week to $92,600.”I’m not sure how many in the crypto scene would have been aware of … the dynamics shaping up in U.S. rates/Treasuries, and many will be questioning the factors behind the move in crypto,” said Pepperstone’s head of research, Chris Weston. More

Aircraft manufacturers and suppliers have struggled to keep up with a post-pandemic recovery in travel due to rising costs, labour and parts shortages, issues that have been exacerbated by safety woes at Boeing (NYSE:BA) and a strike by its staff last year.Avolon’s annual outlook report predicted that airlines’ net profit would rise by 16% to over $36 billion in 2025, driven by low fuel prices, strong revenue and the fact that plane shortages have allowed them to prioritise the most profitable routes.”That production shortfall underpins the supply and demand balance, not just for the next three or four years, but for at least another decade,” Avolon Chief Executive Andy Cronin told Reuters.Cronin said Avolon’s view that the supply and demand balance would be “firmly in our favour” over that time period spurred it to order 200 aircraft in 2023. It added 118 more aircraft last year through the acquisition of smaller rival Castlelake Aviation Limited, bringing its total fleet to 1,129 aircraft.The Dublin-based lessor said Boeing and main rival Airbus will continue to struggle to hit their targets to ramp up production despite increasing their deliveries.Avolon, which is a subsidiary of China’s Bohai Leasing Co Ltd, also predicted that orders from Chinese firms will rise sharply to 800 aircraft in 2025, citing growth in travel demand and a need to replace an aging fleet.While Avolon’s report described the aviation outlook for 2025 as robust, it also noted that economic cycles usually last four to six years and that the current cycle is already in its fourth or fifth year, with growth in Europe slowing.”We characterize it as a low visibility environment at the moment. I think there’s uncertainty around foreign policy and trade policy, and consequential impacts as it pertains to the aviation industry,” Cronin added. More

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Consumer spending dropped 0.4% in November from a year earlier, data from the internal affairs ministry showed, slightly better than the median market forecast for a 0.6% decline. On a seasonally adjusted, month-on-month basis, however, spending increased 0.4%, versus an expected 0.9% fall.Consumers cut back spending on food, clothing and entertainment, while expenditure in education and housing went up, the data showed. Consumption and wage trends are among key factors the Bank of Japan (BOJ) is watching to gauge the strength of Japan’s economy and decide how soon to raise interest rates. November’s pay data released on Thursday showed inflation-adjusted wages slid for the fourth straight month in November, dragged by higher prices even though base pay grew at the fastest pace in three decades. The BOJ ended massive monetary stimulus and raised interest rates to 0.25% last year. While some investors are betting the next rate hike will take place at a Jan. 23-24 meeting, others see a stronger chance in March. More

Peru has since September 2023 gradually eased the key lending rate from a high of 7.75% it held through the first part of that year.In a statement, the central bank said the cut moves the rate to a level it estimates to be “neutral” while adding future rate adjustments will track new data on inflation and its derivatives.The bank’s decision to lower borrowing costs came after December’s inflation rate inched up by 0.11% month-on-month, bringing price increases to 1.97% last year – within the bank’s target range of 2% plus or minus once percentage point.Prices were down from the 3.24% annual inflation rate recorded in 2023 and far below the 8.46% in 2022. December’s annualized rate was also down from 2.27% the previous month.Peru boasts one of Latin America’s lowest benchmark interest rates. More

The wildfires burning in the Pacific Palisades, Eaton (NYSE:ETN), Hurst and other Los Angeles neighbourhoods may lead to insured losses of more than $8 billion, analysts at Morningstar DBRS said in a note. This surpasses the 2018 Woolsey fire in California, which caused more than $6 billion in losses, Morningstar said.Jasper Cooper, senior credit officer for Moody’s (NYSE:MCO) Ratings, expected insured losses to amount to billions of dollars given the area’s high values of homes and businesses.Homeowners have found it tough to buy insurance in catastrophe-prone states as several firms have pulled out of the market.”These events will continue to have widespread, negative impacts for the state’s broader insurance market,” said Denise Rappmund, senior analyst at Moody’s. “Increased recovery costs will likely drive up premiums and may reduce property insurance availability.”Morningstar DBRS also said a larger than usual portion of the losses could be uninsured or covered under the California FAIR plan, designed to help homeowners where standard insurance is not available.JPMorgan on Thursday estimated insured losses at $20 billion, Thomson Reuters (NYSE:TRI) publication The Insurer reported, double its estimates of a day earlier due to an escalation of the damage. More

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