Economy

The report added drugs on the list will not be subject to requirements such as prior authorization or quantity limits. The government will ask for feedback on its initial list of 101 generic drugs which will cover common prescriptions such as penicillin, metformin, lithium and albuterol asthma inhalers, according to the Axios report. It would also include common drugs for high cholesterol, high blood pressure and other chronic conditions. The program is not expected to start until January 2027, the report said.The Centers for Medicare & Medicaid Services did not immediately respond to a Reuters request for comment. The U.S. Medicare health program spends billions of dollars annually on drugs for over 67 million people aged 65 and older or who have disabilities.It recently unveiled new maximum prices for the first 10 high-cost prescription medicines negotiated under the Biden Administration’s Inflation Reduction Act. More

LONDON (Reuters) – Ethiopia’s bondholders will have to take a writedown as part of the country’s debt restructuring, State Finance Minister Eyob Tekalign told Reuters, adding he still hoped the debt rework could be completed by year-end. Ethiopia became Africa’s third country to default in as many years in December 2023, but progress on restructuring its international debt has been slow as the country negotiated a $3.4 billion programme with the International Monetary Fund.Investors have rejected the government’s most recent indicative debt rework scenario, which sets out an 18% haircut – or writedown – on its sole $1 billion bond maturing in 2024.Ethiopia needs to abide by the IMF’s debt sustainability analysis which envisages Ethiopia “moving to medium risk distress under low debt carrying capacity in the next two, three years,” said Eyob, referring to the calculations and projections underpinning debt reworks. “Based off of that, some haircut is needed,” he said, adding the latest debt sustainability analysis showed the country had a solvency issue and not just the liquidity crunch bondholders had assumed. Eyob said non-disclosure agreements between the government’s and the bondholders’ advisors were extended last week to spring 2025, allowing for more negotiations. However, formal talks with bondholders were not on the agenda right now though Ethiopia was open to meeting them on the sidelines of the IMF World Bank meetings later this month. “We’re hoping to meet them there,” Eyob said.Speaking about efforts to shelter the poorest section of the population from the fallout of birr depreciation, Eyob said a raft of measures had been taken for which the government had earmarked 30% of its budget in 2024.Measures ranged from subsidies for items such as cooking oil, fertilizer and fuel, to lifting salaries of civil servants by as much as 300% for those on the lower pay scale.Eyob said he did not expect price pressures to materialise on the scale predicted by analysts, who have forecast average inflation could hit 30% in 2025 after 23% this year. “The signs are that we are actually going… on the opposite side of that,” he said, confirming the country was on track for single digit inflation by June 2025.Government reforms had sparked fresh interest from investors, Eyob said, predicting foreign direct investment – which came in at more than $3 billion in the financial year to early-July – to double in the next two or three years.”Mining is a fairly new sector… and we’re seeing significant interest in this,” said Eyob, adding agriculture and manufacturing were also a focus.Asked about a swap line Ethiopia has agreed with China’s central bank according to reports in September, Eyob declined to give details, though said it should be bigger than the $800 million it has with the UAE. “It would significantly enhance business between the two countries,” he added. More

BEIJING (Reuters) – China has recently engaged in “intensive communications” with the United States and the European Union on electric vehicle trade issues, state news agency Xinhua reported on Wednesday, citing people familiar with the matter. The China-EU working team will continue consultations following the EU’s final anti-subsidy ruling on Chinese EVs on Oct. 4, Xinhua reported. More

WASHINGTON (Reuters) – The Federal Aviation Administration could approve a license for the launch of SpaceX’s Starship 5 as soon as this month, a source told Reuters on Tuesday.Last month, the FAA said it did not expect a determination on a license before late November. SpaceX said on social media late on Monday that Starship’s fifth flight test could launch as soon as Oct. 13, pending regulatory approval.The FAA, which has repeatedly said it did not expect to decide on a license until late November, on Tuesday only said it continues to review the proposed mission and would make a decision “once SpaceX has met all licensing requirements.” It made no mention of the November timeframe.SpaceX CEO Elon Musk has harshly criticized the FAA, including for proposing a $633,000 fine against SpaceX over launch issues and for the delay in approving the license for Starship 5, which the company says has been ready to launch since August.Musk has called for the resignation of FAA Administrator Mike Whitaker and threatened to sue the agency.SpaceX suggested last month the delay in FAA approval was over “superfluous environmental analysis”Whitaker faced questions at a congressional hearing last month about the delay and responded that SpaceX had failed to complete a timely sonic boom analysis for the Starship 5 launch.”The delay of the Starship (launch) had to do with SpaceX filing an application and not disclosing that they were in violation of Texas and federal law on some matters, and that’s a requirement to get a permit,” Whitaker said.In an email invitation to VIP guests seen by Reuters, SpaceX said it is targeting the launch for Sunday. The invitation added “as with any test, there is a chance we don’t launch on the first attempt.”On Sunday, the FAA said SpaceX’s workhorse Falcon 9 rocket could return to flight for a mission on Monday for the European Space Agency’s Hera spacecraft from Florida.The FAA on Sept. 30 said SpaceX must investigate why the second stage of its Falcon 9 malfunctioned after a NASA astronaut mission, grounding the launch vehicle for the third time in three months. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Volatility in the $27tn US Treasury market has surged to its highest level since the start of the year, as nervy investors quickly readjust their expectations for how quickly the Federal Reserve will cut interest rates.Stellar jobs numbers on Friday sparked one of the biggest daily swings in bond yields this year, as investors pencilled in a slower pace of rate cuts. The 10-year yield, which had been falling since late April, jumped 0.13 percentage points on the day as prices fell, and is now trading above those levels at about 4.02 per cent. Investors are now bracing for potential further volatility on Thursday when US consumer price inflation data is released.“The market is still lurching from one narrative to the other on an almost weekly basis,” said William Vaughan, associate portfolio manager at Brandywine Global Investment Management.The Ice BofA Move index, a gauge of bond investors’ expectations of future volatility in the Treasury market, jumped on the jobs data to its highest level since January and has remained elevated.“Because the Fed has been data-dependent, [for] every economic number, you have this volatility risk,” said Leslie Falconio, head of US taxable fixed income strategy in UBS Asset Management’s chief investment office.The jobs data dashed investor hopes of a half-percentage point cut at the Fed’s November meeting. Investors are now expecting two quarter-point cuts by the end of the year, according to swaps markets.New York Fed president John Williams told the Financial Times this week that the central bank was “well positioned” to pull off a soft landing for the US economy. But decisions would hinge on the data, rather than following a “preset course”, he said.Economists are forecasting a slight fall in annual consumer price inflation to 2.3 per cent in September when figures are published on Thursday. “If we see a small miss to the downside on CPI tomorrow then I think the rally in Treasuries could resume,” said Craig Inches, head of rates and cash at Royal London Asset Management.“By contrast, a strong inflation number would likely see a very sharp re-rating of interest rate expectations, and call into question the ability for the Fed to cut further in 2024.”Jeffrey Sherman, deputy chief investment officer at asset manager DoubleLine, said on a webcast on Tuesday that it felt like the US economy is “still in a decent spot”. But “things could fall apart if we decide to all save money and we don’t want to consume any more”, he added. “We’re not out of the woods yet.” More

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NEW YORK (Reuters) – It may not quite be the famous question of Shakespeare’s Hamlet, but it is something very much on the minds of U.S. homeowners these days: To refi or not to refi?Judging from the latest numbers, there is a lot of pent-up demand for Americans looking to refinance their home mortgages.In fact, refi applications recently jumped 20% in a week, according to the Mortgage Bankers Association, and accounted for 56% of all mortgage applications.Average rates on 30-year mortgages approached 8% last November. They stood at 6.4% on Tuesday, according to Bankrate.Federal Reserve Chair Jerome Powell has signaled that more Fed cuts are on the way, now that inflation is back down to manageable levels, which should trickle through the financial system.For homeowners, that potentially means big savings.Yet refinancing can be an intense process – in terms of time, documentation and fees. You can expect that costs will be in the region of 3-6% of the loan principal, according to lender Freddie Mac.And keep in mind that if you secured your mortgage years ago, your existing rate is likely below where rates are right now.So how much of a rate differential makes a refi truly worth the hassle? “The general rule of thumb is a 1-2% rate reduction for refinancing to be worthwhile,” says Matt Vernon, head of consumer lending for Bank of America.The interest rate is just one element of the refi decision. Here are a few factors to help you make that call and close the deal.DO NOT TRY TO TIME IT PERFECTLYTrying to time mortgage rates is like trying to time the stock market: You are never going to get it exactly right.So when you are offered an attractive rate that makes financial sense for your situation, do not overthink it. If rates continue to fall, you can always consider refinancing for a second time later on.“For homeowners who are trying to time things perfectly, there is no point in waiting another year for rates to drop by (another quarter of a percentage point) when they are moving so much on individual days,” says Daryl Fairweather, chief economist for real estate brokerage Redfin (NASDAQ:RDFN). “Rates will continue to come down – but it’s going to be a bumpy ride.”FOCUS ON THE TERM, NOT JUST THE RATEA lower mortgage rate is one factor in the refi equation. But if you are stretching out what you owe, you could actually be adding to your total bill.“Refinancing a 30-year mortgage for a home bought five years ago with a new 30-year mortgage today overstates the monthly savings,” warns David Flores Wilson, a financial planner in New York City. “The new mortgage will have five additional years of payments.”Instead, think about taking advantage of lower rates to tighten up the term – say to 15 years, instead of 30. For your retirement years, owning a home free-and-clear 15 years ahead of schedule can be a game changer.Says Jorie Johnson, a financial planner in Brielle, New Jersey: “We are seeing a lot of interest in refinancing to a shorter term at a slightly lower interest rate, and saving a lot of total interest paid over the term of the loan.”CONSIDER THE PURPOSEThere are other reasons why a refinance might make sense for you.For instance, you may have built up significant equity in the property amid the robust real estate market over the past few years. National home prices are hitting all-time highs, according to the S&P CoreLogic Case-Shiller Index.That would allow you to do what is called a “cash-out refi,” tapping some of that value to pay for a project like a much-needed renovation.And if your credit score is up considerably since you originally took out the mortgage, that will lower the mortgage rates you will see from lenders.SHOP AROUNDTo truly maximize the moment of declining rates, do not just interact with your current loan servicer. “These days there are so many tools online, where you can see multiple quotes at the same time,” says Fairweather. (Among them: LendingTree, NerdWallet, Bankrate, WalletHub and GoBankingRates.)“My best advice is for people to look beyond their own bank, and wherever they happen to have their checking account,” Fairweather notes. “That is likely not where you are going to get the best rate.” More

(Reuters) – Minutes of the U.S. Federal Reserve’s half-a-percentage-point rate cut last month, to be released on Wednesday, may provide a final word on just how divided policymakers were over a decision that took many economists by surprise and sparked the first dissent from a member of the Board of Governors in 19 years.Fed chair Jerome Powell in his post-meeting press conference said there was “broad support” for the half-point cut, with even dissenting Governor Michelle Bowman agreeing it was time to ease monetary policy but preferring to start with a smaller quarter-point reduction as a hedge against inflation risks she is not convinced have been fully tamed.Yet Powell also acknowledged a “good diversity of excellent discussion” about the decision, while projections issued by Fed policymakers about what would happen over just the next three months were unusually dispersed. In anonymized rate cut projections issued at the September meeting policymakers saw rates falling anywhere from 0 to 0.75 basis points further by the end of the year. This is a spread matched in the Fed’s September 2022 projections, when officials were still in the midst of hiking rates and debating how much farther they would need to go to tame inflation, but before that not seen since September 2016.The three-month time horizon provided in the Fed’s September outlook to the end of the current year is the shortest in the central bank’s Quarterly Summary of Economic Projections.The minutes, to be released at 2 pm EDT (1800 GMT), provide a detailed account of the back and forth among policymakers and staff over the course of each two-day meeting. They contain sections on the economic and financial outlook as well as an account of officials’ views about appropriate monetary policy and the risks they feel the economy is facing. While it is a backward-looking document, typically issued three weeks after each Fed meeting, it can also better frame for the public and investors the spread of opinion around each policy vote. In doing so it also can provide clues about how the Fed might react to incoming economic data.The minutes “may shed some light on the bar for officials to move policy rates lower at a faster rate,” economists from Citi wrote on Monday.Investors currently expect the Fed to lower the benchmark rate another quarter of a point at the Nov. 6-7 meeting and then again in December.The document may also give a better sense of whether the half-point cut was a hard sell for its proponents or not. Though there was only one dissent, that does not speak to how the 7 non-voting participants in the meeting, the presidents of some of the regional reserve banks who rotate in and out of voting positions year by year, felt about the move, or about how the voters viewed their options. In an interview last week, Richmond Fed president Thomas Barkin, who does have a vote this year and supported the half-point, said he was open to a smaller reduction as well and did not see much macroeconomic difference between the two. He noted that starting with the larger reduction was consistent with the policy paths outlined by almost all 19 Fed officials. Nine officials, for example, expected four quarter point cuts for all of 2024 would be appropriate, while seven others projected three only.”It was a big tent,” Barkin said. “If you were going to end up somewhere in that range…it was reasonable to do 50. It also would have been reasonable to do 25. I was perfectly comfortable voting for 50.” From here, Powell and other officials have noted, the Fed can tailor the pace and extent of cuts depending on how the economy and inflation evolve.A Friday jobs report cemented views among investors that the Fed would scale back to a quarter point cut at its November 6-7 meeting after payroll employment surged more than expected, the unemployment rate fell, and wage growth at 4% remained above what policymakers see as consistent with their 2% inflation target. New inflation data to be released on Thursday will be the latest key data point in the debate, with policymakers generally open to continued rate cuts as long as there is evidence price pressures are continuing to ease. More