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LONDON (Reuters) – IKEA annual sales fell 5% after the Swedish budget homeware retailer cut prices in a bid to attract more shoppers and maintain its share of a shrinking home furniture market, but it expects a recovery next year.Ingka Group, which owns most IKEA stores globally, reported 39.6 billion euros ($43.3 billion) in sales for its financial year ended Aug. 31.”In all our markets we experienced a slowdown of the economy and a slowdown of the home furnishing industry, almost simultaneously,” said Jesper Brodin, CEO of Ingka Group. “We never experienced anything like that since 2008, to be honest.”After seeing a decline in store visits and sold quantities, IKEA decided to cut prices, which boosted footfall and the amount of products sold, Brodin said.Ingka Group said it invested more than 2.1 billion euros in price cuts across its markets, and its share of the global home furnishing market stayed steady at 5.7%.IKEA has benefited from households trading down as a global property slowdown hurt confidence, said Tolga Oncu, retail manager at Ingka Group. For 2025, IKEA expects a boost to sales as lower interest rates drive more people to move house, which usually prompts buying of beds, sofas, and bookcases. Store visits increased by 3.3% to 727 million this year, slower than the 7.4% growth seen in 2023 and new openings fell to 41, from 60. Ingka plans 58 new locations worldwide in its 2025 financial year.Its share of sales made online increased to 28%, up from 26% in 2023.NOT GOING OUT AT CHRISTMASThis holiday season, like last year, Oncu expects people to spend more time hosting at home rather than going out, with budgets still constrained by inflation. Inter IKEA Group, which owns the IKEA brand and manufactures the products, reported annual sales of 45.1 billion euros ($49.3 billion) across all franchisees, of which Ingka Group is the biggest. That was down 5.3% compared to 2023, largely due to price cuts as the cost of raw materials like wood fell.Inter IKEA CEO Jon Abrahamsson Ring said more price reductions were planned for its 2025 financial year, which started on Sept. 1, but likely not as significant.($1 = 0.9143 euros) More
(Reuters) – U.S. regional banks preparing for higher capital requirements will get some relief from the Federal Reserve’s jumbo rate cut.As lenders gear up to report third-quarter earnings this month, monetary easing will help regional banks to shrink paper losses on bond portfolios that were seen as a drag on future profits.The changes were proposed as U.S. regulators aim to tackle weaknesses that caused three regional banks to fail last year and fueled turmoil in the financial industry. The Fed estimated the changes would equate to a 3% to 4% increase in the amount of capital that mid-sized banks were required to hold. “The impact for these banks initially could be quite higher from” proposed changes in capital rules, said David Fanger, Moody’s (NYSE:MCO) senior vice president Moody’s Ratings for financial institutions group. In the short term, however, the rate cut “alleviates some of the fears on capital” for regional lenders, which will be the “disproportionate beneficiaries” from looser monetary policy, said Chris McGratty, an analyst at Keefe, Bruyette & Woods. At issue are banks’ bond holdings, which eroded in value as the Fed raised rates from 2022. Lenders haven’t yet lost money on the bonds because they still hold the securities, which could appreciate in value as the Fed cuts, narrowing potential losses.Silicon Valley Bank failed in March 2023 after it lost money from selling U.S. Treasuries.Regional banks are in a much stronger position after last year’s woes, said Ken Usdin, an analyst at Jefferies.”As you look forward over the next couple of years, banks are going to see upwards of at least a 25% further recovery of those unrealized losses, part of which is going to get accelerated into this quarter.”For instance, Comerica (NYSE:CMA) could benefit from the rate cuts, putting it into an excess capital position by 2027, McGratty said. Comerica declined to comment. It will hold a conference call on Oct. 18 to discuss earnings.Other banks are also taking steps to bolster their capital or rejig their securities books.KeyCorp (NYSE:KEY) had $3.7 billion in unrealized losses on its available-for-sale (AFS) securities on August 9. The holdings are classified as AFS because the bank has the option to sell those bonds or securities before they mature.The lender recently took steps to boost capital and trim its securities. When it sold a $14.9% stake to Canada’s Scotiabank in August and in September, it offloaded about $7 billion of low-yielding investments that would result in an after-tax loss of about $700 million in the third quarter.The divestment reduced Key’s paper losses to $3.0 billion, and it projects these losses to shrink even further, to $1.6 billion by the end of 2026, based on the forward interest rate curve, the company said in an email. Key will give an update during its earnings on Oct. 17.The company’s shares have risen over 17% this year, surging in the third quarter after a decline in the second. Other regional bank stocks have also rallied.PAPER LOSSESMore broadly, U.S. banks’ unrealized losses on available-for-sale and held-to-maturity securities have declined significantly from the peak of $690 billion two years ago, but still stood at $513 billion in the second quarter, according to the Federal Deposit Insurance Corp.Fitch Ratings predicted the Federal Reserve will cut rates by 175 basis points through 2025, which will further reduce paper losses.Banking giants such as JPMorgan Chase (NYSE:JPM) and Wells Fargo are already required to set aside money to account for their unrealized bond losses. They kick off earnings season on Friday.Mid-sized lenders had so far been spared from higher capital requirements, but that could change if the new rules come into force.The Basel endgame proposal has been rolled back to become less onerous for the largest banks, which are already the most tightly regulated, said Mike Mayo, an analyst at Wells Fargo. Meanwhile, smaller lenders “still have to pay an extra toll,” he said. More
NEW YORK (Reuters) – For many parents, it is a familiar, sinking feeling: Adding your kid as an authorized user to your debit or credit card – and then seeing a surprise purchase pop up on your statement.If it is any consolation, you are not alone. In fact, 59% of parents gave a child permission to use their credit or debit card, according to a survey by online lending marketplace LendingTree.But here is the fallout: 31% end up regretting it.”Parents might assume that their kid will be fine with a credit card – and then they learn the hard way, when things don’t go the way they expect,” says Matt Schulz, LendingTree’s chief credit analyst and author of the new book “Ask Questions, Save Money, Make More.”For example, unauthorized purchases surprised 22% of parents, according to the LendingTree survey – most often because of a saved card on an app or website, which makes one-click buying extremely easy.That, in turn, can raise thorny family problems. What exactly are kids allowed to buy, and what are they not? Should card access ever be revoked? And if lines are crossed, how can families use it as a teachable moment?To be sure, adding a kid to your credit cards is a very common practice because it helps them build their own credit. With a lengthy history of on-time payments, it will be much easier for them to launch financially. Without a credit history, getting car loans, rental apartments or even their own credit cards, can be very difficult indeed.Here are a few guidelines to teach your kids to use credit cards wisely.SET EXPECTATIONSIf you do not have an initial conversation with your child about how to handle credit access, you are asking for trouble.“Make sure you communicate expectations,” Schulz says. “Outline what the consequences will be if they overstep. Nobody ever wants to have that conversation – but it’s a whole lot easier to have beforehand, rather than after they have done something wrong.”USE PREPAID CARDS OR CHECKING ACCOUNTS This is some potential middle ground: Access to a predetermined pot of money. This does not prevent the possibility of shady purchases, but it does limit the potential damage.This is a safer option for younger children or teenagers, says Alyson Basso, a financial advisor with Hayden Wealth Management in Middleton, Massachusetts.“These give you more control because they can only spend what’s on the card, so there’s no risk of overdrawing an account,” Basso says.In a similar way, a checking account can be a useful way to teach money-management skills without dangling the temptation of big credit lines. That is how financial advisor Jeremy Keil of New Berlin, Wisconsin, approached the issue.“I opened a student checking account for my 8th grade daughter, put $400 into it, and said ‘You’re in charge of all your back-to-school clothes,’ ” Keil says. “It has worked great – she is highly responsible with her purchases, and has been babysitting to add money into the account herself.”PUT LIMITS IN PLACEIf you are concerned that your child might run wild with a big credit line, it is easy to put multiple guardrails in place. First, add them as an authorized user without even giving them a physical card or telling them at all, says Schulz.Avoid pre-loading your card information into websites or apps, a step that seems to be the main culprit for credit abuse. Having to physically enter all the card data each time can be added “friction” that will cut down on surprise purchases.”Many cards allow you to limit the number or size of purchases for authorized users,” adds Schulz, noting that it is helpful to set up automated alerts every time a transaction is made. “If parents are looking for extra controls, that can be a critical thing.” More
WASHINGTON (Reuters) – A crackdown by the U.S. consumer finance watchdog on hidden or excessive financial fees could expand to target billions of dollars in mortgage, credit reporting and other fees if Vice President Kamala Harris wins the presidential election.Expunging “junk fees” has been a central, and popular, plank of Democratic President Joe Biden’s push to bring down prices. And with inflation and the economy at the heart of the presidential race, Democratic candidate Harris has pledged to carry on the fight. Rohit Chopra, director of the U.S. Consumer Financial Protection Bureau under Biden, has targeted around $20 billion of annual bank overdraft, credit card and bounced-check fees, according to the agency’s data. But there are billions of dollars of other fees the agency could go after with four more years of Democratic leadership. Chopra’s term ends in 2026.According to a CFPB official and a second regulatory source, the CFPB’s next top targets include mortgage closing costs and business-to-business fees that trickle down to customers, in particular borrower credit-score fees. While there is no publicly available data on the total annual value of these fees, a Reuters analysis of CFPB and other data suggests they could exceed $24 billion. “Harris would be wise to continue to focus on junk fees … as vice president she’s observed the success first-hand,” said Aaron Klein, senior fellow at the Brookings Institution think tank. The CFPB says the financial system is riddled with fees that are not disclosed up front or which are excessive and distort the free-market system by concealing the true price of goods and services. Banks say the fees are transparent and that eliminating them will hinder Americans’ access to credit. They have sued to overturn the CFPB’s March rule capping credit card late fees at $8, down from the typical $32. “U.S. consumers don’t want new regulations that make it more expensive to use their credit cards and other banking products,” said Bill Hulse, senior vice president at the U.S. Chamber of Commerce which is leading the credit card litigation. He said the group would continue to advocate on fees. That is not deterring the CFPB, which expects to finalize curbs on overdraft and bounced-check fees by year-end, after which mortgage closing costs are its next top target, said a CFPB official who requested anonymity to discuss the agency’s plans. The CFPB this year flagged that closing costs, which comprise dozens of individual fees, are a barrier to affordable housing and may merit regulatory action. Median total loan costs in 2022 rose more than 20% year-on-year to reach nearly $6,000 for home purchase loans and $5,000 for refinancings, according to CFPB data. That suggests borrowers spent roughly $24 billion on closing costs last year, based on the 4.2 million homes that were purchased and refinanced, according to Mortgage Bankers Association data. The CFPB flagged that title insurance, which typically costs 0.5% to 1% of the purchase price, is among the most expensive components of closing costs. It also said that mortgage lenders have reported that the fees they pay for borrower credit reports and scores, which can exceed $100 and are ultimately passed on to borrowers, have jumped since 2022, sometimes by as much as 400%. That is also a key focus for the CFPB, both sources said. The second source added that these types of big-business-to-small-business information fees were generally on the agency’s radar. The CFPB has also been cracking down on fees lenders charge customers for information about their accounts on items such as outstanding loan balances or fraud inquiries, its website says. It has also called out ATM fees and the fees charged by retailers for cash back in stores. “If Democrats win, you’re going to see continued pressure on all types of fees,” said Isaac Boltansky, director of policy research at brokerage BTIG.PUSHBACKCFPB officials believe the agency has the authority to cap fees, but firms dispute that and have signaled they will fight more curbs. In an August letter, lenders and title insurers warned that they believe Congress did not give the CFPB power to set fees in the mortgage-origination process. Congressional Republicans have also criticized the CFPB’s Chopra for what they see as overreaching. Analysts believe that if Republican candidate Donald Trump wins, the agency would pull back. Some executives, though, worry that a recent pledge by Trump to cap credit card interest rates indicates that if he wins the election, the CFPB may be tougher on lenders than during his first presidency from 2017 to 2021.Whoever wins the election, the Consumer Bankers Association, which represents major retail lenders, has already launched a campaign that pushes back on the “junk fee” narrative. “What we don’t want to see repeated is this administration’s campaign against banks,” said Lindsey Johnson, the group’s CEO, referring to the Biden administration. “Whoever wins, the banks need to be at the table, participating in the discussion.” More
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The print is expected to show a modest increase in inflation, with headline CPI rising by 0.1% month-over-month (MoM) and core CPI by 0.3% MoM. According to BofA, this would be more of a “bark than bite” moment for the markets, with limited implications for the Federal Reserve’s path.While the initial reaction to a 0.3% core CPI print might lead to some volatility, especially in the US Treasury (UST) market, the impact will be short-lived. They project core PCE inflation at 0.18% MoM, which aligns with the recent trend and is consistent with the Fed’s 2% target.“This, in our view, should encourage market pricing for a 25bps cut in November,” strategists said, unless inflation accelerates more than expected. For the market to consider a higher chance of no rate cut, BofA notes that a core PCE reading of 0.3% or higher would be necessary.In the bond market, BofA expects a resurgence of buying interest in USTs if the CPI report confirms that disinflation remains on track.“CPI will be a test for whether buyers return to the UST market after the recent selloff,” BofA noted.A print in line with their forecast would likely lead to a rally concentrated in shorter maturities, as investors remain cautious about election risk and the possibility of a hard landing.BofA also points out that the upcoming CPI report will be important for gauging market sentiment toward the Fed’s November meeting.While the market currently assigns a 16% chance of the Fed holding rates steady in November, the bank does not expect a single month’s data to drastically alter the Fed’s policy direction.“Even after the strong payrolls report, Fed speakers still indicate a bias for additional cuts, and it would be very unlikely in our view for the Fed to adjust the direction of policy from one month’s data,” strategists continued.In terms of broader market sentiment, BofA remains neutral on breakevens (BEs), pointing out that recent rallies have been driven by improving risk sentiment and rising oil prices. However, it remains skeptical about the sustainability of these drivers, particularly as their equities team forecasts a year-end S&P 500 level below current prices.Further increases in oil prices, they believe, will depend on geopolitical developments in the Middle East. More
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