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Reforms that the government has put in place such as on pensions and unemployment “will bear fruit and help (…) with the budgetary situation in France, but it needs a bit more unfortunately,” Pierre-Olivier Gourinchas told France Inter. In its 2024 budget, the French government is aiming to reduce debt and to make 16 billion euros in savings. On Wednesday, the government pushed revenue legislation in the 2024 budget bill through the lower house of parliament using special constitutional powers to bypass a lawmakers’ vote, after failing to gain enough support.The spending side of the budget bill, which is to be examined by lawmakers starting next week, includes plans for 16 billion euros in savings, with 10 billion coming from the end of gas and power price caps.Finance minister Bruno Le Maire said that the decision by Moody’s (NYSE:MCO) Investment Service on Friday to maintain France’s rating “strengthens our will to cut debt and my determination to restore our public finances.” More

The central bank will make its policy more “precise and forceful”, while guiding financial institutions to cut real lending rates and reducing financing costs for firms and individuals, Pan said in the report published on the bank’s website.Efforts will be made to activate the capital markets and boost investor confidence, Pan said in the report that outlined the authorities’ near-term priorities and was delivered to the country’s parliament.Pan pledged to “implement macro policy adjustments in response to the changes in the economic situation, effectively strengthen financial supervision, focus on expanding domestic demand, boosting confidence and preventing risks, and promote a sustained recovery in the economy,” according to the report.China’s economy grew at a faster-than-expected clip in the third quarter, while consumption and industrial activity in September also surprised on the upside, suggesting a recent flurry of policy measures is helping bolster a tentative recovery.Pan also said in the report China would resolve the default risk of bonds of big real estate enterprises, preventing risk contagion in stock, bond and foreign exchange markets, and ensuring the stable operation of financial markets. More

NEW YORK (Reuters) – Growing volatility in U.S. stocks is driving a search for defensive assets, though investors may have fewer places to hide this time around.Wall Street’s most closely-watched measure of investor nervousness, the Cboe Volatility Index, on Friday hit its highest in nearly seven months, as the S&P 500 slid for the week. The benchmark stock index is down 8% from late July, when it hit its high for the year, though still up 10% year-to-date.Assets that can help investors weather the storm may be in short supply. Equity sectors such as utilities and consumer staples, popular with nervous investors when markets grow choppy, have been swept up in the S&P 500’s recent decline. The Japanese yen stands at its lowest against the dollar in about a year. U.S. government bonds are on track for an unprecedented third straight annual loss, with yields on the benchmark 10-year Treasury – which move inversely to bond prices – at their highest since 2007. That has left investors piling into other traditional safe-haven assets such as the dollar and gold, as well as short-term debt. Nevertheless, “it is no doubt a challenging environment for well-diversified portfolios,” said Angelo Kourkafas, senior investment strategist at Edward Jones. Of Treasuries, he said, “We have this safe haven asset class that is not necessarily at the moment getting any bid or providing much safety from that volatility of the headlines.”Investors have plenty of reasons to be jumpy. Rising bond yields have dampened risk appetite, raising the cost of capital for companies and offering investment competition to stocks. Federal Reserve Chairman Jerome Powell on Thursday said the stronger-than-expected U.S. economy might warrant tighter policy. Fears that the conflict in the Middle East will widen have made traders more anxious, while a weaker-than-expected earnings report for Tesla (NASDAQ:TSLA) this week also darkened the mood. Volatility in stocks has been accompanied by increased gyrations in the Treasury market. The MOVE index, which measures expected volatility in U.S. Treasuries, stands near a four-month high.”When rates are increasing at the rate they are and the geopolitical situation is what it is, now you are getting a bid to volatility,” said Brent Kochuba, founder of options analytics service SpotGamma.The week ahead will be busy for markets, with earnings due from Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META) – four of the seven U.S. megacap stocks whose gains have powered the S&P 500 higher this year while the rest of the index has lagged. The index’s defensive sectors have been battered this year, with utilities down about 18%, consumer staples off nearly 9% and healthcare down roughly 6%, partly because higher yields on Treasuries have dulled their allure.”Safe-haven assets have not performed as expected in response to conflicting growth data and elevated geopolitical tensions,” analysts at UBS Global Wealth Management wrote on Friday. Investors still have some portfolio hedges. Prices for gold have soared 8% since the conflict between Israel and Hamas broke out this month. In currencies, the Swiss franc, a longstanding safe haven asset, stands near its highest level against the euro since 2015. The dollar is up 5% in the last three months. Some investors are moving to short-term Treasuries or money-market funds, which are providing more attractive returns since interest rates began rising early last year. “There are certainly plenty of investors who … at 5% plus rates on completely liquid Treasury bills are willing to park there while they await some clarity on inflation and on the economy,” said Rick Meckler, partner at Cherry Lane Investments. U.S. money market funds have seen $640 billion in inflows this year, according to LSEG data.To buffer against bond market volatility, UBS analysts said they preferred five-year duration relative to 10-year “to earn yield and to mitigate the risk that 10-year yields continue to rise.”They also recommended hedging against a widening conflict in the Middle East by taking long futures positions on Brent crude oil.Geopolitical uncertainties, climbing bond yields and the risk of more losses in stocks means “investors face fresh uncertainties,” they wrote. More

WASHINGTON (Reuters) -U.S. and European Union negotiators failed to reach deals to settle longstanding trade disputes in time for a summit at the White House on Friday, but Washington said it would keep providing some relief from tariffs on steel and aluminum, and both sides said talks would continue.Senior U.S. administration officials said they made significant progress on the trade issues but more work was needed to reach deals on energy subsidies and the steel and aluminum market.U.S. President Joe Biden hosted European Council President Charles Michel and European Commission chief Ursula von der Leyen for a meeting dominated by discussions about the war between Israel and Hamas, and ensuring continued support for Ukraine in its now 600-plus day fight against Russia’s invasion.”We are more united than ever,” the leaders said in a joint U.S.-EU statement that touched on the war in the Middle East, Russia’s war in Ukraine, concerns about China, and pledged continued efforts to strengthen economic security, ensuring secure energy transitions in our economies and reinforcing multilateralism and international cooperation.Biden noted at the start of the meeting that the EU and the U.S. were standing together to support Israel and Ukraine, but would also discuss ways to address “unfairly traded steel and aluminum imports” and talks about critical minerals.”Sometimes we have our differences,” Michel said. “That’s why we are here: to cooperate, to find solutions that work for businesses and workers on both sides of the Atlantic.”Trade negotiators had scrambled on Thursday to avoid the U.S. resuming import tariffs on EU steel and aluminum imposed by then-President Donald Trump in 2018, ultimately agreeing to keep the tariffs at bay while they keep talking.The joint statement said negotiators had made “substantial progress to identify the sources of non-market excess capacity” and find ways to measure the emissions intensity of the steel and aluminum industries.”We look forward to continuing to make progress on these important objectives in the next two months,” it said.A senior U.S. administration official said the U.S. would roll over tariff rate quotes, or TRQs, by the end of the year if more time for talks was needed, adding, “We are committed to providing certainty to our industry and workers and to our EU partners.”The United Steelworkers (USW) International labor union welcomed what it called the Biden administration’s commitment to defending domestic steel and aluminum workers instead of “bowing to outdated thinking on international trade and the EU’s political pressure.”Friday’s move staves off the resumption of the Trump-era tariffs on EU-produced steel and aluminum that the Biden administration had agreed to halt in exchange for a quota system, but it was unclear how long a reprieve would be granted.The Biden administration suspended tariffs on EU steel and aluminum imports on the condition that both sides agree by the end of this month on measures to address overcapacity in non-market economies such as China, and to promote greener steel.A second official said more work was needed to finalize an agreement, but there was no discussion of reinstating – or snapping back – Trump’s “national security” tariffs on steel and aluminum, the official said. “That is not on the table.”Any deal seems far off, with Washington keen that the EU apply the metal tariffs to imports from China and Brussels refusing to do so before a year-long investigation to comply with World Trade Organization rules.Negotiators would keep talking over the next two months, but Washington is already eyeing a two-year extension of the tariff relief, mindful of the challenges of getting a deal done in 2024 given EU elections in early June and U.S. elections in November. The summit also fell short on a deal to lessen the hit on European producers from the U.S. Inflation Reduction Act, which offers consumers tax breaks to buy electric vehicles (EVs) assembled in North America, by allowing critical minerals mined or processed in Europe to qualify for some of the tax credits.The joint statement cited progress toward a “targeted” deal, and said the leaders looked forward to continuing negotiations in the coming weeks.(Reporting Andrea Shalal and Jeff Mason; Additional reporting by Jarrett Renshaw; Editing by Heather Timmons, Jonathan Oatis, Alistair Bell and Marguerita Choy) More

Moody’s last changed its outlook on Britain one year ago, when Truss had spooked markets with unfunded tax pledges, culminating in her resignation.Her replacement as Prime Minister, Rishi Sunak, reversed those policy decisions and pledged to restore Britain’s economic stability and fix her mistakes when he took office last October.”Policy predictability has been restored after heightened volatility last year around the mini-budget,” the ratings agency said, affirming the country’s rating at “Aa3″.”While structural spending pressures and relatively high inflation will pose risks to the government’s ability to fully deliver on its fiscal plans, Moody’s still expects fiscal policy to gradually tighten over the coming years.” British inflation, at 6.7% in the year to September, is the highest of any major advanced economy and last week the International Monetary Fund forecast its economy would grow just 0.5% next year, the weakest in the Group of Seven.The government borrowed 81.7 billion pounds ($99.35 billion) in the first half of the 2023/24 financial year, 15.3 billion pounds more than between April and September 2022, but about 20 billion pounds less than the government forecast in March.Britain’s Office for Budget Responsibility (OBR), which is in charge of the forecasts, said tax revenue had been higher in cash terms due to faster than expected inflation and pay growth.However, finance minister Jeremy Hunt has said the better budget outcome does not allow scope for the tax cuts which many in his Conservative Party want to boost their standings in the wake of recent electoral defeats.Hunt said on Sunday that Britain’s debt servicing costs were likely to rise by 20 billion to 30 billion pounds a year due to higher interest rates, and described the increase in borrowing costs as “clearly not sustainable”.Hunt is due to give a fiscal update on Nov. 22.Standard and Poor’s (NYSE:SPY) had already revised up its outlook for Britain’s sovereign credit rating in April, removing the “negative” label they applied after Truss’s mini-budget.On Friday S&P affirmed its AA rating and stable outlook for Britain.($1 = 0.8224 pounds) More

It raised late on Friday the country’s local and foreign currency long-term issuer ratings to ‘BBB-/A-3’, with a stable outlook, citing stronger budgetary position.The other two agencies, Fitch and Moody’s (NYSE:MCO), rate the country one notch below investment grade. DBRS Morningstar upgraded Greece’s rating to investment grade BBB (low) last month.S&P said it expects budget surplus target to help in paring the country’s government debt, and added that it is cautious about political pressures hindering Greece’s ability to sustain large primary budget surpluses. Greece lost its investment-grade credit rating, which implies a low risk of default, in 2010 when its decade-long debt crisis erupted, forcing it to sign up for international bailouts worth about 260 billion euros ($275.34 billion) to stay afloat.It emerged from the debt crisis in 2018 and was the only country in the eurozone with a “junk” rating.S&P expects “additional structural economic and budgetary reforms, coupled with large EU funds, will support robust economic growth in 2023-2026.” Greece expects economic output to rise 3% in 2024 following a 2.3% expansion this year more than twice the eurozone average. It also projects a 2.1% of GDP primary budget surplus next year on higher investment and strong tourism revenue.The conservative government hopes now that the upgrade will trigger more capital inflows and reduced borrowing cost for the country’s businesses.”In the short and medium term, we expect inflows from index-tracking funds, upgrade of banks assets and more favorable borrowing cost for companies,” a senior finance ministry official told Reuters.Greece’s 10-year government bond yield was at 4.38% on Friday, about 58 basis points below Italy’s equivalent. “I think all the ratings specific news is priced in. It’s trading as investment grade anyway,” Rabobank senior rates strategist Lyn Graham-Taylor told Reuters. ($1 = 0.9443 euros) More

(Reuters) -Shares of mid-sized U.S. banks fell on Friday after a string of earnings reports heightened investor concerns that the boost to lenders from the Federal Reserve’s interest rate hikes was tapering off.Regions Financial (NYSE:RF) shares plummeted over 12% to $14.44 after missing profit estimates, when an industry crisis began following an outflow of deposits that engulfed three banks.The lender said it expects net interest income (NII) in the fourth quarter to decline about 5% from current levels.”We see the entire bank group as inexpensive but, on a relative basis, we would rather invest elsewhere,” Wells Fargo analyst Mike Mayo said about Regions Financial. The headwinds from higher rates could last longer than expected, Mayo added.Regions Financial reported profit of 49 cents per share for the third quarter, missing analysts’ average estimate of 58 cents, according to LSEG data.The lender also missed its estimates on net interest income, credit costs and expenses while share of bad loans increased at a faster pace than expected, R. Scott Siefers, an analyst at Piper Sandler said in a note.The U.S. regional banks have been grappling with tepid performance after the collapse of three lenders in spring this year which sparked deposit outflows leading to earnings being under pressure since then.UNDERWHELMING MARGIN TALK A busy earnings week for banks has highlighted that the Fed’s rate hikes forced several of them to pay higher interest on deposits to stem the migration of customers to alternatives such as money-market funds.That, together with an expected slowdown in loan demand as borrowing costs increase, dampened expectations of NII growth in the fourth quarter.”The higher for longer environment will continue to pressure net interest margins and overall profitability, as well as the risk of certain borrowers who are unable to repay,” said Terry McEvoy, banking analyst at Stephens.Huntington Bancshares (NASDAQ:HBAN)’ stock dipped 3.88%, while Comerica (NYSE:CMA) dropped 8.5%, dragging down the S&P 500 Banks index by over 2%.The KBW Regional Banking index also fell by over 3.50%.Lenders such as Fifth Third Bancorp (NASDAQ:FITB) and Comerica have also forecast a drop in NII.Huntington Bancshares posted an 8% drop in third-quarter profit as interest income declined. While its margins and net interest income are expected to improve throughout 2024, its expenses are also expected to pick up which could weigh on its performance, analysts said. More