Economy

European families are sitting on an ever-growing pile of savings, confounding hopes that consumer largesse will kickstart the region’s stagnant economy.”The saving rate is expected to remain high in the near term, albeit somewhat lower than its most recent peak, partly reflecting the moderating interest rates,” the ECB said in an Economic Bulletin article published on Wednesday. Euro zone households saved 15.7% of their disposable income in the second quarter of last year, the most recent period for which data is available, well above levels around 12% to 13% before the pandemic.This has been weighing on consumption and kept overall economic growth hovering just above zero for just over a year, despite the ECB repeatedly predicting a consumption-led recovery. The main culprit is the 2021/2022 inflation surge which eroded the real wealth of households, the bank said. “With the surge in inflation, households’ real net wealth declined in the past two years, increasing the incentives for them to rebuild their wealth,” the ECB said.A rebound in real incomes and high real interest rates have also boosted savings. However, the ECB maintained its view that household spending would eventually recover.”The likely downtick in the saving rate together with continued strong growth in real labour income are expected to help the momentum of private consumption,” the ECB said. More

LOS ANGELES (Reuters) – A rapidly growing wildfire raged across an upscale section of Los Angeles on Tuesday, destroying numerous buildings and creating traffic jams as more than 30,000 people evacuated, while a second blaze doubled in size some 30 miles inland.At least 2,921 acres (1,182 hectares) of the Pacific Palisades area between the coastal towns of Santa Monica and Malibu had burned by the Palisades Fire, officials said, after they had already warned of extreme fire danger from powerful winds that arrived following extended dry weather.A fire official told local television station KTLA that several people were injured, some with burns to faces and hands. The official added that one female firefighter had sustained a head injury.The second blaze dubbed the Eaton (NYSE:ETN) Fire broke out some 30 miles (50 km) inland near Pasadena and doubled in size to 400 acres (162 hectares) in a few hours, according to Cal Fire. Almost 100 residents from a nursing home in Pasadena were evacuated, according to CBS News. Video showed elderly residents, many in wheelchairs and on gurneys, crowded onto a smokey and windswept parking lot as fire trucks and ambulances attended.Fire officials said a third blaze named the Hurst Fire had started in Sylmar, in the San Fernando Valley northwest of Los Angeles, prompting evacuations of some nearby residents.PALISADES FIREWitnesses reported a number of homes on fire with flames nearly scorching their cars when people fled the hills of Topanga Canyon, as the fire spread from there down to the Pacific Ocean.Local media reported the fire had spread north, torching homes near Malibu.Los Angeles Fire Chief Kristin Crowley had earlier told a press conference that more than 25,000 people in 10,000 homes were threatened.Firefighters in aircraft scooped water from the sea to drop it on the nearby flames. Flames engulfed homes and bulldozers cleared abandoned vehicles from roads so emergency vehicles could pass, television images showed.The fire singed some trees on the grounds of the Getty Villa, a museum loaded with priceless works of art, but the collection remained safe largely because of preventive efforts to trim brush surrounding the buildings, the museum said. With only one major road leading from the canyon to the coast, and only one coastal highway leading to safety, traffic crawled to a halt, leading people to flee on foot.Cindy Festa, a Pacific Palisades resident, said that as she evacuated out of the canyon, fires were “this close to the cars,” demonstrating with her thumb and forefinger.”People left their cars on Palisades Drive. Burning up the hillside. The palm trees – everything is going,” Festa said from her car.Before the fire started, the National Weather Service had issued its highest alert for extreme fire conditions for much of Los Angeles County from Tuesday through Thursday, predicting wind gusts of 50 to 80 mph (80 to 130 kph).With low humidity and dry vegetation due to a lack of rain, the conditions were “about as bad as it gets in terms of fire weather,” the Los Angeles office of the National Weather Service said on X.Governor Gavin Newsom, who declared a state of emergency, said the state positioned personnel, firetrucks and aircraft elsewhere in Southern California because of the fire danger to the wider region, he added.The powerful winds changed President Joe Biden’s travel plans, grounding Air Force One in Los Angeles. He had planned to make a short flight inland to the Coachella Valley for a ceremony to create two new national monuments in California but the event was rescheduled for a later date at the White House.”I have offered any federal assistance that is needed to help suppress the terrible Pacific Palisades fire,” Biden said in a statement. A federal grant had already been approved to help reimburse the state of California for its fire response, Biden said.Pacific Palisades is home to several Hollywood stars. Actor James Woods said on X he was able to evacuate but added, “I do not know at this moment if our home is still standing.”Actor Steve Guttenberg told KTLA television that friends of his were impeded from evacuating because others had abandoned their cars in the road.”It’s really important for everybody to band together and don’t worry about your personal property. Just get out,” Guttenberg said. “Get your loved ones and get out.” More

COLOMBO (Reuters) – Sri Lanka will focus on stronger recovery this year after the island nation posted real GDP growth of 5% in 2024, the highest in seven years, its central bank chief said on Wednesday, hoping to accelerate a rebound from its worst financial crisis in decades. Sri Lanka’s economy crumpled under a severe foreign exchange crisis in 2022, but has posted a faster than expected rally after it secured a $2.9 billion International Monetary Fund (IMF) program in March 2023 and completed a $25 billion debt restructuring in December.The economy grew 5.2% in the first nine months of 2024, outstripping the 3% estimate by the Central Bank of Sri Lanka (CBSL), Governor P. Nandalal Weerasinghe said.”Achieving a transformative acceleration in growth trajectory is essential to catch up and enhance the growth potential. This would also help enhance the debt-carrying capacity of the country,” he said at a annual policy agenda launch.Taking advantage of lower inflation, which reached minus 1.7% in December, Sri Lanka’s central bank set a new single policy rate of 8%, easing monetary settings below previously used benchmarks and setting the stage for stronger private sector credit growth, Weerasinghe added.Inflation is expected to reach positive territory in mid-2025, after which CBSL will focus on maintaining a 5% inflation rate.CBSL will also strengthen monetary policy forecasting, continue to improve its reserve buffers under the IMF program, and introduce a benchmark spot exchange rate in 2025. Weerasinghe said.Sri Lanka will continue recapitalisation of banks, consolidate large finance companies, and review the Statutory Reserve Ratio (SRR) of 2% to increase financial system stability, the Governor added. More

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DAR ES SALAAM (Reuters) – Tanzania’s central bank left its key interest rate unchanged at 6% on Wednesday, holding it steady for a third consecutive policy meeting, with an aim of keeping inflation below its target.When it launched the rate in January 2024, the bank set it at 5.50%. The bank targets inflation of 5%, and consumer inflation has stayed comfortably below that figure.Inflation is forecast to stay around the range of 3.1% and 4% in the first quarter, Bank of Tanzania Governor Emmanuel Tutuba said in a statement.Tanzania’s economy is forecast to grow by about 6% this year from an estimated 5.4% in 2024, its finance minister and central bank governor said in November in a letter to the International Monetary Fund.The economy is forecast to grow 5.7% year-on-year in the first quarter, Tutuba said. (This story has been refiled to fix garbled words in paragraph 1) More

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(Reuters) – A look at the day ahead in Asian markets. Investors go into Wednesday’s market trading in Asia with their appetite for risk smothered by the rise in global bond yields.As ever, U.S. Treasury yields are front and center for markets that are more exposed than most to dollar-denominated debt and U.S. borrowing costs. Especially on medium- to longer-dated maturities.The 10-year U.S. yield is its highest in eight months, the ‘2s/10s’ curve is the steepest in nearly three years, and the 30-year yield is within 10 basis points of 5.00%. It has climbed 60 bps in a month.Longer-dated yields are rising globally even though many central banks are lowering policy rates – Britain’s 30-year gilt yield is the highest since 1998. The U.S. Treasury’s sale on Wednesday of $22 billion of 30-year bonds could have a major impact on world markets.There are times when signs of U.S. economic resilience lift the global outlook and risk appetite picks up, but the release of surprisingly strong U.S. job opening figures on Tuesday was not one of them. It was a case of ‘good news is bad news’, U.S. yields and the dollar rose, and stocks tumbled.That’s the global backdrop for Wednesday’s trading, which is likely to set the tone in Asia given how light the local economic calendar is. There is little sign that Japan’s yen or China’s yuan is emerging from their recent funk, and currency traders in Asia will be on heightened alert for intervention from Japan after the dollar on Tuesday rose as high as 158.40 yen.That’s the highest since July last year and close to the psychologically significant 160.00 yen level, and comes after Japanese finance minister Katsunobu Kato on Tuesday warned against what he said is speculative, one-sided yen selling.Traders will note that a break of the 160 per dollar level prompted yen-buying intervention from Japanese authorities last year. The weak yen helped the Nikkei rise 2% back above 40,000 points on Tuesday but futures are pointing to a fall of as much as 1% at the open on Wednesday.The news flow around China, meanwhile, is still on the bleak side, offering investors little incentive to start buying beaten down Chinese assets. U.S. President-elect Donald Trump on Tuesday doubled down on his commitment to slap hefty tariffs on goods imported from major trading partners, and figures on Tuesday showed China’s FX reserves fell by $64 billion in December. That was the biggest monthly fall since April 2022, and one of the steepest since the yuan slide and waves of capital flight in 2015-16Chinese stocks are down 5% so far this year, significantly underperforming their regional and global peers. The yuan is its weakest against the dollar since September 2023, and Chinese bond yields are collapsing. Here are key developments that could provide more direction to markets on Wednesday:- Australia inflation (November)- South Korea current account (November)- Japan consumer confidence (December) More

SINGAPORE (Reuters) – The dollar stood tall on Wednesday and the yen sagged close to levels that drew intervention last year after strong U.S. data drove a spike in yields and pared some bets on Federal Reserve rate cuts.The yen touched 158.42 overnight, its weakest on the dollar for nearly six months, and last sat at 158.15.Japan Finance Minister Katsunobu Kato had warned against speculative yen selling a day earlier as the exchange rate nears the 160 level that drew dollar selling half a year ago.”Even chart wise it’s an important resistance level,” said Bart Wakabayashi, Tokyo branch manager at State Street (NYSE:STT).”We’re getting very strong U.S. numbers…which has rates going up,” he said, pushing expectations of Fed rate cuts out to the northern summer or beyond.”There’s even the discussion about will they cut or may they even hike? The narrative has changed quite significantly, leading to what should be maybe a bit more dollar strength.”The euro fell about 0.5% overnight and traded at $1.0345 early in the Asia day. Sterling had also dipped and bought $1.2478. China’s yuan was likely to open the onshore session under pressure, having touched a 16-month low earlier in the week. [CNY/]Traders have a wary eye on U.S. labour data due on Friday and on inauguration day on Jan. 20, when Donald Trump is expected to begin his second U.S. presidency with a flurry of policy announcements and executive orders.Overnight data showed U.S. job openings unexpectedly rose in November, layoffs were low, while services sector activity accelerated in December and a measure of prices paid for inputs hit a two-year high – a possible inflation warning.Bond markets reacted by sending 10-year yields up more than eight basis points to touch an eight-month high of 4.699%, while the 30-year yield rose 7.4 bps and is less than nine bps from breaching 5%. [US/]Traders price only about 37 bps of easing through this year, according to LSEG data derived from rates futures.The dollar followed suit and the contrast between the solid U.S. economy and weak data in Australia and New Zealand has the Antipodean currencies plumbing multi-year lows.New Zealand is in outright recession and, having lost more than 11% on the greenback last year, the kiwi huddled at $0.5636 on Wednesday, not far from a two-year low of $0.5588 struck late in December.The Australian dollar sank 9.2% on the dollar through 2024 and, at $0.6228, is not far from breaking a 2022 low of $0.6170. Australian monthly inflation data showed headline CPI crept up from three-year lows in November, though a drop in core inflation bolstered the case for a rate cut. More