Economy

NEW YORK (Reuters) -A gauge of global stocks was set for its biggest weekly drop in two months and the 10-year U.S. Treasury yield hit its highest level in 5-1/2 months on Friday as economic data and comments from Federal Reserve officials suggested a slower pace of interest-rate cuts ahead.Fed Chair Jerome Powell said on Thursday the central bank did not need to rush to lower interest rates due to ongoing economic growth, a solid job market and inflation that remains above its 2% target. The U.S. Commerce Department reported on Friday that retail sales rose 0.4% last month after an upwardly revised 0.8% advance in September. The growth topped the 0.3% rise expected by economists polled by Reuters, after a previously reported 0.4% gain in September.”In the last 48 hours we’ve had some pretty big changes, not just from the election but from economic data that was better than expected and Powell speaking about not having to be as aggressive on interest-rate cuts,” said Adam Rich, deputy chief investment officer for Vaughan Nelson in Houston.”Market expectations for interest-rate cuts have come down materially and also the market is re-adjusting after a pretty bullish reaction to the U.S. election.”In addition, the Labor Department said on Friday that import prices unexpectedly rose 0.3% last month after an unrevised 0.4% decline in September amid higher prices for fuels and other goods. Analysts had expected a decline of 0.1%. Equities had rallied after the U.S. presidential election, as investors gravitated toward assets expected to benefit from President-elect Donald Trump’s policies in his second term after he pledged to impose higher tariffs on imports, reduce taxes and loosen government regulations.But the gains have fizzled in recent days as markets try to calibrate the Fed’s rate-cut trajectory and any legislative policy changes. On Wall Street, the Dow Jones Industrial Average fell 305.87 points, or 0.70%, to 43,444.99, the S&P 500 fell 78.55 points, or 1.32%, to 5,870.62 and the Nasdaq Composite fell 427.53 points, or 2.24%, to 18,680.12. Each of the three major indexes closed at record highs on Monday.For the week, the S&P 500 fell 2.08%, the Nasdaq declined 3.15%, and the Dow lost 1.24%. Other Fed officials made comments on Friday that also clouded the picture on the timing and magnitude of more rate cuts.MSCI’s gauge of stocks across the globe slumped 8.53 points, or 1.00%, to 842.67. It was on track for its fourth-straight decline and biggest weekly percentage decline since early September, around 2.4%. In Europe, the STOXX 600 index closed down 0.77% but eked out a small weekly gain, its first in four weeks. Bond yields and the dollar have surged not just on growth prospects but also on concerns that Trump’s policies may rekindle inflation after a long battle against price pressures following the pandemic. In addition, tariffs could lead to increased government borrowing, further ballooning the fiscal deficit and potentially causing the Fed to alter its course of monetary-policy easing.The dollar index, which tracks the U.S. currency against peers including the euro and Japan’s yen, was 0.12% lower on the day to 106.75 with the euro off 0.02% at $1.0528.The greenback had risen for five straight sessions and was poised for its biggest weekly percentage gain since early October.  Against the Japanese yen, the dollar weakened 1.24% to 154.31. Sterling was down 0.45% to $1.2608.Expectations for a 25-basis-point cut at the Fed’s December meeting stood at 58.4% on Friday, down from 72.2% in the prior session, and 85.5% a month ago, according to CME’s FedWatch Tool.The yield on benchmark U.S. 10-year notes rose 1.9 basis points to 4.439% after earlier reaching 4.505%, its highest level since May 31. The yield is up about 13 bps this week and is set for its eighth weekly rise in the past nine.U.S. crude settled down 2.45% to $67.02 a barrel and Brent fell to settle at $71.04 per barrel, down 2.09% on the day, as investors digested a slower Fed rate-cut path and waning Chinese demand.  More

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The consumer price index (CPI) rose by 2.6% in October, data showed on November 13, while the core rate, which strips out food and energy, rose 3.3% – in line with market expectations. Citigroup (NYSE:C) stuck to its view of a cut of 50 bps in December, while all major brokerages continue to see a 25-bps cut post the inflation report.Following the CPI data, Powell affirmed in prepared remarks delivered at a Dallas Fed event on November 14 that ongoing economic growth, a solid job market, and inflation above its 2% target means the central bank does not need to rush to lower interest rates.”We now see a greater risk that the FOMC(Federal Open Market Committee) could slow the pace sooner, possibly as soon as the December or January meetings,” Goldman analysts said in a note dated November 14 following Powell’s remarks. Here are the forecasts from major brokerages after the CPI data:Rate cut estimates (in bps) Brokerages Dec’2024 2025 Fed Funds Rate BofA Global 25 Research 50 3.75%-4.00% (end of June) Barclays (LON:BARC) 25 50 3.75%-4.00% (end of 2025) Macquarie 25 100 3.25%-3.50% (through (through June 2025) June 2025) Goldman Sachs 25 3.25%-3.50% (through 100 September 2025) (through September 2025) J.P.Morgan 25 3.75% (through September 75(throug 2025) h September 2025) *UBS Global 25 125 3.00%-3.25% (through Research end of 2025) TD Securities 25 100 3.25%-3.50% (through end of 2025) Morgan Stanley (NYSE:MS) 25 3.375% (Q4 2025) 100 (through June 2025) Jefferies 100 25 3.25%-3.50% (through end of 2025) Nomura 25 25 4.00-4.25% (through end of 2025) *UBS Global Wealth 25 100 3.25%-3.50% (through Management end of 2025) Deutsche Bank (ETR:DBKGn) 25 – – Citigroup 50 – – *UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group Here are the forecasts from major brokerages before the CPI data:Rate-cut estimates (in bps) Brokerages 2024 Nov Dec BofA Global 25 25 Research Deutsche Bank 25 25 Barclays 25 25 Macquarie 25 25 Goldman Sachs 25 25 J.P.Morgan 25 25 *UBS Global Wealth 50 Management Citigroup 25 50 More

The spending limits are enshrined in Germany’s constitution, but political parties have bristled at the limitations as Europe’s biggest economy tries to boost a recovery held back by high energy prices following Russia’s invasion of Ukraine.A dispute over spending led to the collapse of Germany’s government last week, when Chancellor Olaf Scholz fired finance minister Christian Lindner, ending a coalition between Scholz’s SPD, Lindner’s pro-market Free Democrats and the Greens.Referring to signs of willingness for reform from the centre-right opposition, SPD leader Lars Klingbeil told the Handelsblatt newspaper: “That’s a good starting point for continuing straight away.”Opposition leader Friedrich Merz of the conservative Christian Democrats (CDU) has said he could be open to reforming the debt brake, which limits Germany’s public deficit to 0.35% of gross domestic product, in certain circumstances.Merz has been tipped to succeed Scholz as chancellor in snap elections set for Feb. 23, with the CDU currently leading in the polls.”Perhaps people will then look back on this moment and understand what an opportunity the democratic centre parties missed here,” said Lars Klingbeil on Friday in social platform X.Now would be the time for a responsible compromise by the Democrats, he said, asking the conservative CDU for an agreement, as reform requires a two-thirds majority in parliament. “First the country, then the party,” he said. “We would be ready.”Within the CDU, the debate about debt brake reform was reopened this year by Kai Wegner, the conservative mayor of Berlin. Several powerful CDU leaders from other regional governments have joined the push for reform because the states are more constrained than the federal government, having no structural leeway to incur new debt.The services sector trade union Verdi welcomed the new openness of Merz to reform the debt brake. “This is an insight into what is necessary,” Verdi’s head Frank Werneke told Reuters. “We have a massive investment backlog in Germany, over 180 billion euros in the municipal sector alone.” If the next government also continues to modernise the armed forces and maintains its support for Ukraine, this will not be possible without additional borrowing, he said. More

LONDON (Reuters) -Unilever is cutting about 1,500 fewer jobs in Europe than initially anticipated and hiring about 1,000 people, primarily those affected by its cost-cutting drive, for its soon-to-be spun off ice cream business, the head of the company’s European Works Council told Reuters. The British company, whose shareholders include billionaire activist investor and board member Nelson Peltz, has been trying to streamline its business over the past year under CEO Hein Schumacher. Prior to his apppointment, Unilever (LON:ULVR) had underperformed for years and was criticised for allowing its brand portfolio to grow to around 400, leaving management with too little time to focus on its best performers.Some investors had also said Unilever was too slow to revive margins in the wake of the Covid-19 pandemic and needed to become leaner.Unilever said earlier this year it would axe 7,500 jobs globally as part of a restructuring to save about 800 million euros ($845 million). It also said it would spin off its ice cream unit which is home to brands including Ben & Jerry’s and Magnum. Unilever’s European Works Council (UEWC) has strongly criticized those decisions, saying a realignment of the ice cream business could have been successfully managed within Unilever. UEWC Chairman, Hermann Soggeberg, told Reuters exclusively on Friday that the company had, however, reached a deal in October with Unilever that would see a reduction of about 1,700 jobs having initially anticipated about 3,200 job losses in Europe. “We have been negotiating intensively with the company throughout the summer,” Soggeberg said.He said Unilever is still making the savings it promised to investors, but was able to significantly reduce the job cuts in Europe through savings projects from 2022 to 2024 and not hiring externally.Soggeberg said about 1,000 additional jobs will be offered at Unilever’s European ice cream company primarily to employees affected by job cuts in the rest of Unilever’s business.”They are planning for growth in ice cream,” Soggeberg said. “We agreed with Unilever that this process to hiring these people will be synchronized with the job cut program.”The ice cream business’ spinoff is expected to complete by the end of 2025, London-listed Unilever has previously said, adding that it would move to a separate head office in Amsterdam.”We remain fully on track to deliver the 800 million euros savings from our productivity programme,” a Unilever spokesperson said. “When we announced the programme, we were determined to mitigate the impact of these changes on our people and so we are pleased that we have achieved this in Europe,” the spokesperson added. ($1 = 0.9464 euros) More

According to LSEG data, investors acquired a massive $37.37 billion worth of U.S. equity funds in their largest weekly net purchase since at least January 2014.Investors expect that Trump’s policies would boost the U.S. corporate sector with lower taxes, more lenient regulation and consolidation across industries through mergers and acquisitions. The small-cap equity funds segment saw robust demand, securing the largest weekly inflow in four months at $7.43 billion net. Meanwhile, the large-cap segment attracted $18.89 billion, the most in six weeks, with multi-cap and mid-cap funds receiving net additions of $2.66 billion and $633 million, respectively.Investors pumped $4.42 billion into financial sector funds, the biggest amount in at least a decade. Industrials and consumer discretionary also drew $1.28 billion and $453 million worth of inflows, respectively.U.S. bond funds continued to attract strong demand, drawing in $5.71 billion in net purchases for the 24th consecutive week. General domestic taxable fixed income funds and loan participation funds saw significant inflows, receiving $2.5 billion and $2.15 billion respectively.Investors, meanwhile, snapped up $76.56 billion worth of money market funds, extending net purchases into a second straight week. More

President-elect Donald Trump’s transition team is planning to kill the $7,500 consumer tax credit as part of broader tax-reform legislation, Reuters reported Thursday.”It would be so counterproductive,” she said when asked about the report. “You eliminate these credits, and what do you do? You end up ceding the territory to other countries, particularly China.” More

ABUJA (Reuters) -Nigeria’s inflation rate rose for the second straight month in October, advancing to 33.88% in annual terms from 32.70% in September mainly due to higher food prices, official data showed on Friday.Inflation quickened sharply in the second half of last year after President Bola Tinubu devalued the country’s naira currency and cut subsidies to try to lift economic growth and shore up public finances.It started to ease in July this year as the impact of the naira devaluation began to fade, but a series of petrol price increases and severe flooding that has wiped out crops again spurred price pressures, exacerbating the worst cost-of-living crisis in decades in Africa’s most populous nation.A report by the National Bureau of Statistics said food inflation reached 39.16% year-on-year in October from 37.77% the previous month, caused by price rises for staples such as rice, maize, bread, potatoes and cooking oil.Torrential rain and floods in 29 of Nigeria’s 36 states this year have destroyed more than 1.5 million hectares of cropland, making millions go hungry and causing mass displacement. The central bank has hiked interest rates five times this year to try to get inflation under control. It is due to announce its final rate decision of the year on Nov. 26. More