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Market pricing now reflects around a 70% chance of such a rate cut, which would follow reductions at the ECB’s June and September meetings, as the data pushes policy makers to focus more on growth and less on price pressures. Euro zone business activity contracted sharply and unexpectedly in September, surveys showed, as the bloc’s dominant services industry flatlined and a downturn in manufacturing accelerated, while inflation in France and Spain for September came in very soft. Sources told Reuters that ECB policy doves are preparing to fight for an October rate cut – though this would likely meet resistance from more conservative peers – a turnaround from the aftermath of the ECB’s September meeting when they saw an October move as unlikely. Here are the latest forecasts from some brokerages. Terminal Brokerage Oct ’24 rate Dec ’24 rate/end ’25 forecast cut estimate estimate (bps) (bps) Goldman 25 25 2.0% (June 2025) Sachs HSBC 25 25 2.25% (April 2025) BNP 25 25 2.25% (end-2025 Paribas forecast) RBC 25 25 2.25% (April 2025) JPMorgan 25 25 2.0% (June 2025) Barclays 25 25 2.00% (June 2025) 25 25 2.50% TD (March 2025) Securities 25 25 Close to Jefferies 2.00% (end 2025) Deutsche – 25 2.0%-2.5% (mid-2025) Bank Citi – 25 Likely under 2% UBS IB – 25 2.25% (end-2025 forecast) ING – 25 2.25% (end 2025 forecast) BBVA (BME:BBVA) – 25 2.75% (November 2025) SEB – 25 2.00% (end 2025) More
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WASHINGTON (Reuters) -A port strike on the U.S. East Coast and Gulf of Mexico will go ahead starting on Tuesday, the International Longshoremen’s Association union said on Sunday, signaling action that could cause delays and snarl supply chains.”United States Maritime Alliance … refuses to address a half-century of wage subjugation,” the union said in a statement. The United States Maritime Alliance, known as USMX, represents employers of the East and Gulf Coast longshore industry.USMX did not immediately comment.If union members walk off the job at ports stretching from Maine to Texas, it would be the first coast-wide ILA strike since 1977, affecting ports that handle about half the nation’s ocean shipping.A source said no negotiations were taking place Sunday and none are currently planned before the midnight Monday deadline. The union said previously the strike would not impact military cargo shipments or cruise ship traffic.White House spokesperson Robyn Patterson said late Sunday that over the weekend, senior officials have been in touch with USMX representatives “urging them to come to a fair agreement fairly and quickly – one that reflects the success of the companies.” The officials also delivered the same message to ILA, she added.Earlier on Sunday, President Joe Biden said he did not intend to intervene to prevent a walkout if dock workers failed to secure a new contract by an Oct. 1 deadline.”It’s collective bargaining. I don’t believe in Taft-Hartley,” he told reporters. Presidents can intervene in labor disputes that threaten national security or safety by imposing an 80-day cooling-off period under the federal Taft-Hartley Act.Reuters first reported on Sept. 17 that Biden did not plan to invoke the Taft-Hartley provision, citing a White House official.A strike could stop the flow of everything from food to automobiles at major ports – in a dispute that could jeopardize jobs and stoke inflation weeks ahead of the U.S. presidential election. Business Roundtable, which represents major U.S. business leaders, said it was “deeply concerned about the potential strike at the East Coast and Gulf Coast ports.”The group warned a labor stoppage could cost the U.S. economy billions of dollars daily “hurting American businesses, workers and consumers across the country. We urge both sides to come to an agreement before Monday night’s deadline.”For months, the union has threatened to shut down the 36 ports it covers if employers like container ship operator Maersk and its APM Terminals North America do not deliver significant wage increases and stop terminal automation projects.The dispute is worrying businesses that rely on ocean shipping to export their wares, or secure crucial imports.The USMX employer group has accused the ILA of refusing to negotiate. More
A JPMorgan analysis projected that a strike could cost the U.S. economy $5 billion daily.The strike could hit 36 ports that handle about one-half of U.S. ocean imports. That could affect availability of a range of goods from bananas to clothing to cars shipped via container, while creating weeks-long backlogs at ports. It could also stoke shipping cost increases that may be passed on to voters already frustrated with housing and food inflation, according to logistics experts. WHAT’S THE ISSUE?The International Longshoremen’s Association (ILA) union representing workers at ports from Maine to Texas and the United States Maritime Alliance employer group appear to have hit an impasse over pay. The current six-year contract expires at midnight on Sept. 30.A strike at all East Coast and Gulf of Mexico ports would be the first for the ILA since 1977. The White House said it is not trying to help broker a deal, as it did last year during West Coast talks, and a Biden administration official has said the president would not use his federal powers to block a strike.A widespread and lengthy strike could cause shortages and cost increases across a broad range of industries. WHAT DO LONGSHOREMEN DO?Longshoremen, also referred to as stevedores, handle cargo from incoming ships. They mostly work on container ships, but also do some work with car carriers and cruise ships.They operate cranes that pluck containers from ships to “lashing,” securing cargo containers to prevent them from falling off during transit, and process paperwork. AUTOS, MACHINERY AND PARTSPorts covered by the contract handled $37.8 billion worth of vehicle imports during the 12 months ended June 30, 2024, according to S&P Global Market Intelligence. The Port of Baltimore, Maryland, leads the nation in car shipments. Auto parts are also a key import on the East Coast and Gulf of Mexico, with shipments from Europe more difficult to reroute than those from China, logistics experts said.The ports also lead the U.S. in shipments of machinery, fabricated steel and precision instruments, coming in at $97.4 billion, $16.2 billion and $15.7 billion, respectively, S&P Global Market Intelligence data showed. AGRICULTURE AND PHARMACEUTICALSAbout 14% of all U.S. waterborne agricultural exports, by volume, would be at risk from a strike. Over a one-week period, the potential value of those exports is estimated at $318 million, according to the American Farm Bureau Federation.Additionally, 53% of U.S. waterborne agricultural imports by volume are vulnerable to a strike, leading to a potential economic impact of over $1.1 billion per week, the Farm Bureau said.Three-quarters of the nation’s banana imports from countries like Guatemala and Ecuador land at ports on the East and Gulf Coasts, said Jason Miller, interim chair of Michigan State University’s department of supply chain management. Separately, the U.S. imports coffee and cocoa in large volumes and exports cotton. A strike also would affect container exports of soybeans, soybean meal and other products and would have a significant impact on chilled or frozen meat and eggs, said Mike Steenhoek, executive director of the Soy Transportation Coalition. The $18-billion-a-year U.S. beef and pork export market and the $5.8 billion poultry and egg export sector relies on refrigerated containers that cannot sit idle for long. About 45% of all waterborne U.S. pork exports and 30% of beef exports were shipped via East Coast and Gulf Coast ports in the first seven months of this year, said U.S. Meat Export Federation spokesperson Joe Schuele.More than a quarter of all U.S. egg and egg product exports and around 70% of all poultry meat exports are shipped from ports along the East and Gulf Coasts, according to Customs data and the USA Poultry & Egg Export Council.The affected ports also handle more than 91% of containerized imports and 69% of containerized exports of U.S. pharmaceutical products, according to Everstream Analytics.More than one-third of containers departing the U.S. with lifesaving medications leaves from the port in Norfolk, Virginia, while nearly one-third of containerized pharmaceutical imports enter the country through the port in Charleston, South Carolina. CONSUMER GOODS, ENERGY, MILITARY AND CRUISESRetailers account for roughly half of all container volumes. Many U.S. retailers already have rushed in shipments of year-end holiday goods. The ports that would be affected by a potential strike bring over half of the nation’s knitted and non-knitted apparel, valued at $32.8 billion combined, as well furniture valued at $23.4 billion, according to S&P Global Market Intelligence.Though the Gulf Coast ports of Houston and New Orleans are major oil and gas shipment hubs, those commodities would remain largely unaffected by a strike involving more labor-intensive container cargo. The same applies to coal exports from Norfolk, Virginia, experts said. The ILA, however, has pledged to handle military cargo and to work passenger cruise ships during a strike.HIGHER COSTS, BIG DELAYSIn broad terms, a strike would raise costs for shipping while also imposing lengthy delays.The top five ports in the negotiating group – New York and New Jersey; Savannah, Georgia; Houston; Norfolk; and Charleston – handled more than 1.5 million 20-foot equivalent units (TEUs) valued at $83.7 billion in August, according to John McCown, senior fellow at the Center for Maritime Strategy. About two-thirds of that cargo was inbound, while the remainder was outbound, he said.Trade disruptions from a work stoppage would begin immediately, causing supply chain problems, logistics experts warned.Analysts at Sea-Intelligence, a Copenhagen-based shipping advisory firm, estimated that it could take anywhere from four to six days to clear the backlog from a one-day strike.Maersk, one of the largest providers of ocean transportation and a member of the employer group, warned that a one-week shutdown could require up to six weeks of recovery time, “with significant backlogs and delays compounding with each passing day.” More
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Unlock the US Election Countdown newsletter for freeThe stories that matter on money and politics in the race for the White HousePity the poor American CFOs trying to weigh-up what the US presidential election will mean for their companies. Kamala Harris still hasn’t provided much detail on her economic agenda. (Many assume it’ll just be continuity Biden.) On the Republican side, Donald Trump has made clear that he’d unleash a barrage of tariffs to solve all ills (oh, and maybe dilute the Inflation Reduction Act too).There is enough of a difference there to get planning. Problem is, the polls are on a knife-edge. Among likely voters nationwide, a CNN poll last week found 48 per cent support Harris and 47 per cent Trump. That creates a lot of uncertainty in boardrooms.FTAV wondered if election anxiety is indeed getting to Main Street, and if so, how? Here are five charts:1) News anxiety: First up, businesses must have their head in the sand if they are not picking up on the mounting election chatter in the media. The chart below shows the policy uncertainty index for trade, which reflects the frequency of articles in US newspapers that discuss trade policy uncertainty. It has hit its highest since early 2021, as Trump has made tariffs central to his platform to tackle everything from China and high grocery prices to, erm, childcare costs . . . 2) Boardroom blues: The news chatter has certainly reached some boardrooms. In a research note in August Goldman Sachs said (with FTAVs emphasis below:Election discussions have entered management commentary earlier than in past election cycles, with some companies — particularly financials, government contractors, and those with exposure to the Inflation Reduction Act — noting that either they or their customers are postponing some investment decisions until after the election. Their analysts reckon that capital expenditure growth has been 5 percentage points lower for companies citing election uncertainty on their Q2 earnings calls. But on the upside the same companies could see a bounceback in investment post-election.3) Construction is slowing: Those panicked earnings calls are reflected in actual spending numbers, too. Manufacturing construction spending boomed after the IRA, but it is now easing off. Sure, higher interest rates play a part too. But uncertainty over the future of US industrial policy also contributes to a risk-off mindset. As MainFT reported last month:While the bulk of IRA-related manufacturing investments have flowed to Republican-controlled districts, the law received no votes from party members in Congress. At campaign rallies the former president has vowed to “terminate” the IRA if elected. 4) Contingencies in action: Not convinced? Well, 30 per cent of firms have postponed, scaled down, delayed or cancelled investment plans because of election uncertainty, according to responses on the latest CFO Survey, via the Atlanta and Richmond Fed. That’s slightly up on 28 per cent in the second quarter. Not a majority, but not insignificant either.5) Economic activity to come down: The anxiety and remedial actions to ease it will show up more in the economic numbers as we near voting day (assuming polls remain tight). ISM activity indicators for both manufacturing and services — often leading indicators for GDP — have been flirting with contraction in recent months. Respondents have cited election uncertainty as a factor.The upshot? Well, a tight race between two candidates, with varying implications for particular industries, is not amenable to business-as-usual. Hedging for things like changes in trade, tax, and regulatory policy now, could just be an unnecessary expense. Best just to wait, and it looks like many organisations are.In other words, it won’t just be the weight of the Fed’s previous rate hikes slowing the US economy in the months ahead. Election anxiety will play its part too. More
