Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Jane Street’s trading revenues almost doubled last year and boomed during the tariff-induced turmoil of the first quarter of 2025, as it generated profits rivalling those of Goldman Sachs and Morgan Stanley. The group, which operates in equity, option and fixed-income markets, generated $20.5bn of net trading revenues in 2024, up 94 per cent from 2023, according to people familiar with the matter. Trading levels at Jane Street surged further in the first quarter, as US President Donald Trump’s tariff proposals unleashed chaos in markets. The results come as Jane Street looks to bolster its balance sheet by borrowing $1.35bn through high-yield debt markets on Wednesday, according to people familiar with the matter. The firm’s ability to thrive during market turbulence is helping its debt gain traction with investors. “With Trump in office, they’re going to benefit from his policy volatility,” said one investor who planned to participate in the deal. Jane Street expects to report net trading revenues of about $7.2bn in the first quarter, up more than 60 per cent from the same period a year ago. That would exceed the $6.7bn in first-quarter trading revenues reported this month by Morgan Stanley and brings Jane Street within striking distance of the $8.6bn earned by Goldman. JPMorgan Chase has the highest trading revenues of any bank, generating $9.7bn in the first three months of 2025. Some content could not load. Check your internet connection or browser settings.The results show Jane Street’s growing power in global markets, as it elbows into a business once dominated by traditional Wall Street heavyweights. The company earned $12.96bn of net profit last year, up from $5.9bn in 2023. Its strong financials have set up the company to be one of very few to test the “junk” bond market since Trump’s April 2 “liberation day” tariff announcement. Although Trump has walked back some of the levies, the volatility and uncertainty about trade policy has all but frozen new deals to issue risky debt.Jane Street’s new eight-year bonds priced with a coupon of 6.75 per cent, which is about 2.45 percentage points higher than the yield offered by a similarly maturing Treasury note. The difference, or “spread”, reflects the premium investors demand for taking the risk to lend to a company such as Jane Street, compared with the federal government. One investor said the timing of Jane Street’s debt offering was good, given the market-making group’s record of success in times of volatility, such as during the Covid-19 pandemic. “They’re just making massive amounts of money,” another investor said. Fitch Ratings on Wednesday assigned Jane Street’s new bonds an expected rating of “BB+”, the highest grade the agency gives to speculative debt. Fitch analysts said Jane Street’s “growth has provided a more meaningful buffer against potential operational losses”. Jane Street has borrowed in traditional US corporate debt markets to fund its expansion before. Rating agency Moody’s said it expected the company to use the new money it planned to raise on Wednesday to bolster its trading capital. Firms such as Jane Street and its rival Citadel Securities have used the electronification of financial markets to capture market share from incumbent banks that had historically relied on voice trading. Banks have also found their ability to take risk hamstrung by regulation since the 2008 financial crisis. Jane Street’s role intermediating trades and market making — particularly in the world of exchange traded funds, where it is a dominant player — has bolstered its profitability. One person familiar with the company’s financials said it was growing across all of its major business lines, including trading in equities, currencies and ETFs, with the group benefiting from “heightened volumes” in the fourth quarter.Jane Street has spent heavily to recruit technology specialists to push its business ahead of rivals. It said it expected to spend $1.4bn on compensation in the first quarter. The company expects net income to jump to roughly $4.6bn in the first quarter of 2025. Jane Street declined to comment. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The fallout from US President Donald Trump’s tariff policies risks raising government debt around the world to levels not seen since the end of the second world war, the IMF’s most senior official for fiscal policy has warned.Vítor Gaspar, the director of the IMF’s fiscal affairs department, said the fund’s current worst-case scenario — with public debt rising from 92.3 per cent of global output to 117 per cent by 2027 — could even prove too optimistic if trade tensions intensify. “In 2025, uncertainty sharply rose, trade and geoeconomic uncertainties escalated, financing conditions tightened and financial market volatility increased, and spending pressures have intensified,” Gaspar told the Financial Times. He added that risks were now “more considerable” than the fund’s projections, which were calculated towards the end of last year. The IMF said in its latest Fiscal Outlook, published on Wednesday, that a 117 per cent global debt-to-GDP ratio would be the highest since the aftermath of the second world war. The ratio hit an all-time high in 1946 of 150 per cent, before declining sharply over the 1950s and 1960s. Most of Trump’s “reciprocal” tariffs — first unveiled on April 2 — are now on pause as the US and its trade partners try to negotiate deals over the coming months that will lower the levies. US stocks rallied on Tuesday after US Treasury secretary Scott Bessent said a trade war with China — which remains subject to tariffs of 145 per cent, and which has retaliated with duties on US imports of 125 per cent — was “unsustainable”. Trump echoed Bessent’s remarks later in the day, saying the tariffs on China would “come down substantially”. Gaspar flagged that the global public debt burden was already “high, rising and risky” in 2024, when it climbed above the $100tn mark for the first time. This year “very high uncertainty” over trade policies meant countries “should double down” on efforts to put their “fiscal house in order”, he said. The remarks came as the IMF published forecasts suggesting countries representing 75 per cent of global GDP would see their debt burdens rise in 2025, compared with the previous year. This included the US, China, Germany, France, Italy and the UK. The fund’s baseline projections were similar to those issued in the previous October fiscal monitor, showing global debt to GDP levels topping 100 per cent by the end of the decade — surpassing a pre-pandemic peak. However it noted that “risks of even higher debt levels have increased”.Gaspar welcomed the new German government’s plans to loosen its debt brake as a “very significant” step that would allow Germany to increase public investments on infrastructure and other priorities. “This gives flexibility to a country that has low debt levels, compared with the standard of advanced economies, to spend more,” he said, adding that it was not expected to threaten the finances of Europe’s largest economy. He also praised the French authorities for “very promising” developments in passing their budgets. “It is a move in the right direction,” said Gaspar. “It is clear from developments in markets that the approval of the budget did reduce uncertainty.” More

The IMF projects the U.S.’s overall federal deficit will dip to 6.5% of gross domestic product this year, down from 7.3% in 2024
The multinational fund cited higher tariff revenues for the decline
The IMF highlighted uncertainty surrounding the rollout of higher tariffs and potential revenue increases

A security guard stands outside the building near signs advertising the International Monetary Fund/World Bank Spring Meetings in Washington, DC, on April 17, 2025.
Jim Watson | AFP | Getty Images

The International Monetary Fund forecasts U.S. tariffs will help lower the country’s fiscal deficit a touch in 2025 even as the U.S. growth and inflation outlooks worsen thanks to an intensifying trade war.
The 191-nation’s Fiscal Monitor report released Wednesday projects the U.S.’s overall federal deficit will fall to 6.5% of gross domestic product this year, down from 7.3% in 2024. 

The narrower gap between spending and revenue is “contingent on higher tariff revenues,” according to the report. 
The level was calculated based on the IMF’s “reference point” forecasts, which account for tariff announcements made as of April 4. This includes the U.S.’s reciprocal tariffs announced on April 2, but excludes subsequent rollouts such as the 90-day pause on higher rates and the exemption on smartphones, semiconductors and other technology goods. 
Against this backdrop, the deficit is estimated to fall to 5.6% of GDP in the medium term as revenues rise 0.7%, according to the IMF.
Uncertain revenue
To be sure, the report noted “the magnitude of the tariff revenue increase is highly uncertain.” 
One of the caveats to the reduced deficit projection is the degree to which tariffs will put downward pressure on imports into the U.S., itself dependent largely on how consumers respond to higher prices. This varies widely across products, the report noted. 

Moreover, “the tariff schedule itself is uncertain and plays a crucial role,” the report continued. 
The IMF acknowledged another risk to its forecast: whether tariffs lead to a wider slowdown in economic activity that could lead to a downturn in other segments of tax revenue — such as income tax — that offset higher revenues from tariffs. 
“These projections are highly uncertain and do not account for measures under discussion in Congress, under budget reconciliation” negotiations, the fund said. 
Yields on the benchmark 10-year Treasury note have surged in recent weeks, last trading near 4.40%, as higher tariffs were announced, inflation forecasts raised and as the dollar declined.
If the total size of U.S. government debt continues to surge, the IMF thinks it will push up longer-term interest rates and the cost of financing the debt.
“Specifically, an increase of 10 percentage points of GDP in U.S. public debt between 2024 and 2029 could lead to a 60-basis-point rise in the 5-year forward to 10-year rate,” the IMF staff wrote. One basis point equals 1/100th of a percent, or 0.01.
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Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldSir Richard Branson has launched a stinging attack on Donald Trump’s tariffs, saying that the US president’s “erratic and unpredictable” economic policies risk “doing so much damage”.The founder of Virgin Group said Trump’s policies were “very difficult for businesses to deal with”, after Washington announced a wave of tariffs and trade barriers this month that have shaken global markets. Virgin Group owns an investment portfolio that includes stakes in a range of businesses, including travel, entertainment and telecoms. “If we take Virgin, our cruise ships were booming, our airline was booming, our health clubs were full . . . They’re still OK, but you just sort of feel . . . if he continues, he’s in such danger of doing so much damage in this world,” Branson said on Wednesday.The US government earlier this month unveiled a series of tariffs on goods imported from its trading partners, which have threatened to disrupt global trade. Trump announced a 90-day pause on some of the toughest measures days later, following a big market sell-off, but he also ignited a trade war with Beijing by raising levies on most Chinese goods to as much as 145 per cent.“It’s just such a pity because everything was going so bloody well up to about three months ago,” Branson said. The billionaire was speaking as his long-haul specialist airline Virgin Atlantic launched a new daily route to Riyadh in Saudi Arabia from London’s Heathrow airport. The airline, which is 51 per cent owned by Virgin Group, flies most of its passengers between the UK and the US, and is heavily exposed to a potential downturn in transatlantic flying. Shai Weiss, Virgin Atlantic’s chief executive, said on Wednesday that some passengers had delayed booking trips because of the uncertainty. But he said the weakness of the US dollar, which has fallen in reaction to Trump’s tariffs, could help encourage British travellers to book holidays in the US. Virgin Atlantic earlier this month warned that it had seen signs of softer demand from US customers booking to fly to Europe, one of the first signs of a slowdown in demand for transatlantic flying.The number of European travellers visiting the US has fallen sharply as political and economic tension have combined with fears of a more hostile border policy, the Financial Times has previously reported. Virgin Atlantic also announced on Wednesday the launch of flights to South Korea from 2026, as it expands its routes to Asia. “Whilst transatlantic travel remains core to our business, we are incredibly excited to expand our network in the east,” said Juha Järvinen, chief commercial officer. More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT. Markets are in a more positive mood today — we’ll explain why. Here’s what else we’re covering: Putin’s peace offerLutnick’s son in crypto venture Musk steps back from DogeCrackdown on US scienceMaga Catholics seek “Trump-like” popeMarkets surged overnight after Donald Trump said he had “no intention” of firing Jay Powell, pulling back from a historic confrontation with the US Federal Reserve chair. What did Trump say? The president reiterated his recent complaints that the Fed needed to cut borrowing costs but added: “I don’t want to talk about that because I have no intention of firing him [Powell].” Trump’s sustained criticism of Powell in recent days had rattled global markets and threatened the independence of the Fed, which helps underpin investors’ confidence in the global financial system.How have markets reacted to the comments? Futures tracking the S&P 500 were up 2.5 per cent and those for the tech-heavy Nasdaq climbed 2.7 per cent ahead of the start of trading on Wall Street. In Europe, the Stoxx Europe 600 is up 1.8 per cent and in Asia Japan’s Topix closed 2.1 per cent higher. The dollar index gained 0.3 per cent, extending its rebound from a three-year low, while US government bonds rallied, with the yield on the 10-year Treasury note falling 0.04 percentage points to 4.35 per cent. Gold dropped 2 per cent after hitting a record high of $3,500 per troy ounce yesterday.What this means: Investors said the president’s pledge not to dismiss Powell proved there were some members of his inner circle who recognised that markets valued the independence of America’s major institutions. “This shows there are some guardrails around this president,” said Dec Mullarkey, managing director at fund manager SLC Management. Powell has repeatedly said he would serve his full term as Fed chair and believed his early dismissal would not be allowed under US law. Follow the latest market reaction to Trump’s comments.Join Unhedged’s Robert Armstrong and other FT experts at 8am ET for a webinar covering Trump’s trade policies how they have reshaped markets. Register for free. Here’s what else we’re keeping tabs on today:World Bank-IMF Spring meeting: The event continues in Washington with the release of the Fiscal Monitor Report on global public finances and comes a day after the organisation cut its global growth forecast. Ukraine: A planned ministerial meeting in London to discuss the future of Ukraine has been downgraded after US Secretary of State Marco Rubio withdrew. It comes after the FT reported that Russian President Vladimir Putin offered to halt his invasion at the current front line. Companies: Boeing, IBM and Philip Morris International are among the companies reporting results today. Goldman Sachs holds its annual shareholder meeting.Pope Francis: The late pontiff’s body will be moved to St Peter’s Basilica today to allow Catholics to pay their final respects ahead of Saturday’s funeral. Here’s more on the funeral plans. Five more top stories1. Scott Bessent yesterday warned that the US-China trade war was “not sustainable” and that the two countries would have to de-escalate their dispute in the “very near future”. But the US Treasury secretary admitted trade negotiations with China would be “a slog”. He was speaking at a private conference hosted by JPMorgan. Here’s more on the comments which helped lift market sentiment around the world.2. Elon Musk said he would refocus his attention on Tesla and “significantly” scale back his US government role after the billionaire’s carmaker reported its lowest quarterly profits since the end of 2020. Tesla shares, which have fallen by nearly two-fifths since the start of the year, roared back in after-market trading. 3. Howard Lutnick’s son is partnering with SoftBank, Tether and Bitfinex to capitalise on a crypto revival under Trump. Brandon Lutnick, who took over as Cantor Fitzgerald’s chair after his father became US commerce secretary, is creating a multibillion-dollar bitcoin vehicle that will absorb billions in cryptocurrency from the other partners.4. Grant Thornton US is in talks to buy more than half a dozen of its sister firms in Europe and the Middle East in a private equity-driven acquisition spree that will dramatically reshape the accounting firm’s global network. Stephen Foley in New York has more details.5. Former OpenAI employees and leading artificial intelligence experts are joining forces to oppose the ChatGPT maker’s transition to a for-profit company. In a joint letter submitted to the California and Delaware attorneys-general last night, the group opposed the move while echoing the concerns of Elon Musk. Read more on the letter. Today’s big read© Freya Hyde/FT montage/Getty ImagesThe Trump administration has embarked on a wide-ranging campaign to shrink publicly funded US science, slashing finance for leading organisations and suppressing research on subjects including gender inequalities, vaccines and climate change. Critics say the cuts, fuelled by cost-cutting and ideological missions, threaten to undermine the innovation that has powered America’s economic success. But after a slow start resistance is gathering, report Michael Peel and Hannah Kuchler.We’re also reading . . . Vance’s audition to be Trump’s heir: The many contradictions of the vice-president should not distract from his ambition, writes Edward Luce.Peronist Pope: Outsiders might be surprised to learn that Francis was markedly less popular in his native Argentina than other Latin American Catholic strongholds, writes Michael Stott.Tradwives: Domestic influencers have become pin-ups of the religious right’s quest for higher birth rates, writes Chine McDonald of think-tank Theos. Chip tariffs: Levies on components of foreign-made semiconductors would function as a major tax increase on electronics sold in the US, writes Chris Miller.Chart of the dayIt is the job of the IMF to make sense of what Trump’s unnecessary shock might mean for the world economy, writes Martin Wolf. But the fund, like everyone else, has no idea what the US president will do next, an uncertainty that is itself economically paralysing.Some content could not load. Check your internet connection or browser settings.Take a break from the newsWhat does the future of beer look like? HTSI drinks columnist Alice Lascelles visited the new Heineken Studio in Amsterdam for a taste of innovations including flavoured foams and a “personalised draught system”.Serving a foam-infused pint of Heineken More

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Jerome Powell is chair of both the Fed Board of Governors and the Federal Open Markets Committee, which sets interest rate policy.
Paul Ashworth, chief North America economist at Capital Economics, said firing Powell won’t necessarily change the minds of others at the Fed.
“In all likelihood, however, firing Powell would just be the first step in dismantling the Fed’s independence,” Ashworth wrote.

U.S. President Donald Trump speaks to the media during the annual White House Easter Egg Roll, on the South Lawn of the White House in Washington, D.C., U.S., April 21, 2025.
Leah Millis | Reuters

President Donald Trump’s public criticism of Fed Chair Jerome Powell has fueled concern that he will try to fire the central bank chief, but even that historic and legally questionable move may not be enough for Trump to bend monetary policy in his preferred direction.
Even firing Powell won’t necessarily get Trump the rate cuts he wants, according to multiple economists.

“In all likelihood, however, firing Powell would just be the first step in dismantling the Fed’s independence. If Trump is set on lowering interest rates then he will have to fire the other six Fed Board Members too, which would trigger a more severe market backlash, with the dollar falling and rates at the long end of the yield curve rising,” said Paul Ashworth, chief North America economist at Capital Economics, in a recent note.
Powell is chair of both the Fed board of governors and the Federal Open Market Committee, which sets interest rate policy. Ashworth pointed out that, while FOMC members usually choose to make the president-appointed board of governors chair to lead them, they can buck Trump and choose someone else as head of the rate-setting committee. And JPMorgan’s chief U.S. economist, Michael Feroli, said in a note Monday that “most of the power of the leadership stems from the historical deference” rather than the actual mechanics of the job.
Deutsche Bank senior economist Peter Sidorov echoed the idea that individual Fed members might vote against the wishes of a new leader if they feel Trump has overstepped.
“Note that while the Fed Chair has significant influence over the FOMC, monetary policy actions are taken by a majority vote so removing Powell could lead to increased pushback from other members against pressure on the Fed to deliver easier policy,” Sidorov said in a note to clients Tuesday.
This discussion on Wall Street comes after Trump has criticized Powell multiple times in recent days, including calling the Fed chair “a major loser” in a social media post Monday that rocked financial markets. White House economic advisor Kevin Hassett said last week that the president and his team were exploring the possibility of removing the Fed chair.

It is unclear whether Trump even has the authority to remove Powell before his term as board of governors chair ends next year. Powell has previously said he does not believe it is legally allowed for the president to fire him. The Supreme Court is set to hear an appeal about Trump’s firing of board members at other federal organizations in a case that could shed light on what’s next for the Fed.
The speculation about changes at the Fed, along with the ongoing tariff uncertainty, appears to have hurt investor confidence in the United States. U.S. stocks, bonds and the dollar have all fallen in recent weeks.
Wall Street pros worry that changes at the Fed could lead to further sell-offs and fears of higher inflation.
“Any reduction in the independence of the Fed would add upside risks to an inflation outlook that is already subject to upward pressures from tariffs and somewhat elevated inflation expectations,” Feroli said in a note to clients.
“It has been hoped that these adverse consequences would dissuade the president from threatening Fed independence, though so far the president has often followed through on his intentions,” he added.
— CNBC’s Michael Bloom contributed reporting.

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