Economy

Mimura said yen carry trades built up in the past are likely to have been mostly unwound, according to NHK.”But if such moves increase again, that could heighten market volatility. We are always watching markets to ensure that does not happen,” Mimura was quoted as saying.He said authorities stood ready to act if currency moves become extremely volatile and deviate from fundamentals in a way that cause demerits to companies and households, according to NHK.In July, Mimura took over as vice finance minister for international affairs, a role that oversees Japan’s currency policy, succeeding Masato Kanda.Yen carry trades, which involves borrowing yen at a low cost to invest in other currencies and assets offering higher yields, built up on expectations the Bank of Japan will keep interest rates ultra-low, and were partly behind the Japanese currency’s slide to near three-decade lows in early July.The vast unwinding of such trades, caused in part by the BOJ’s decision on July 31 to raise short-term interest rates, have recently led to a sharp rebound in the yen. More

In their bi-monthly revenue and expenditure report, the Planning and Finance ministries revised the primary deficit forecast for 2024 down to 28.3 billion reais ($5.13 billion).The figure remains within the fiscal target of a zero deficit for the year with a tolerance margin of 0.25 percentage points of GDP in either direction, which allows for a shortfall of up to 28.8 billion reais.In the July report, the deficit was estimated precisely at 28.8 billion reais, factoring in the effects of a total spending freeze of 15 billion reais that the ministries had stated would be necessary at the time.Now, the need to block spending has dropped to 13.3 billion reais, they said.This is partly due to the reversal of a previously frozen 3.8 billion reais, which had been blocked two months ago due to lower revenue expectations. The government now has improved its revenue projections, driven mainly by a recent law implementing measures to offset a costly payroll tax exemption and the expectation of larger dividends.At the same time, the government announced the need to block an additional 2.1 billion reais in spending this year to meet current budgetary rules that limit expenditure growth.Under the new fiscal framework approved by President Luiz Inacio Lula da Silva last year, spending can only increase by 2.5% above inflation in 2024.In practice, this means that when estimates for mandatory expenditures rise, the government must cut other spending to stay within the cap.The Planning and Finance ministries said the new move was necessary to offset rising projections for social security this year, which many economists said the government had already underestimated.($1 = 5.5143 reais) More

(Reuters) – Boeing (NYSE:BA) said on Friday the head of its troubled space and defense unit is leaving the company immediately, in the first management change under new CEO Kelly Ortberg.Ortberg who took over in August said Ted Colbert would be leaving and Steve Parker, the unit’s chief operating officer, would assume Colbert’s responsibilities until a replacement is named at a later date.”At this critical juncture, our priority is to restore the trust of our customers and meet the high standards they expect of us to enable their critical missions around the world,” Ortberg wrote in an email to employees. “Working together we can and will improve our performance and ensure we deliver on our commitments.”Boeing’s space business has suffered significant setbacks, notably NASA’s recent decision to send Boeing’s Starliner capsule home without astronauts that followed years of missteps. Starliner has cost Boeing $1.6 billion in overruns since 2016, according to a Reuters analysis of securities filings.Colbert’s departure comes at a time when Boeing has been trying to save cash by announcing furloughs of thousands of white-collar workers amid a strike by more than 32,000 of its workers.Boeing has also faced significant woes after a new Alaska Airlines 737 MAX 9 in January suffered a mid-air emergency after it was missing four key bolts.Boeing in July agreed to plead guilty to a criminal fraud conspiracy charge and pay at least $243.6 million after breaching a 2021 deferred prosecution agreement. The government said Boeing knowingly made false representations to the Federal Aviation Administration about key software for the 737 MAX.The FAA has tightened oversight of Boeing and barred it from expanding production of the MAX beyond 38 planes per month until it makes significant quality and safety improvements.Parker was brought in to shore up industrial leadership and help fix loss-making programs with a new operating management role just under two years ago. He had previously headed Boeing’s bomber and fighter programs as well as its St Louis defense plants.”Historically, Boeing held a superior reputation for our ability to manage programs, and we need to ensure it remains a key differentiator for us in the future,” Ortberg wrote in separate email to employees on Friday.Ortberg added he had learned “more about the future investments we need to make to be competitive and define our future, as well as about some of the more near-term hurdles engineering faces with first-time quality and execution.”Colbert, who joined Boeing in 2009 after working at Citigroup and Ford Motor (NYSE:F), took the reins at Boeing Defense and Space in April 2022 after the prior head of defense was ousted.Boeing’s defense, space and security unit, one of its three main businesses, has lost billions of dollars in 2023 and 2022, which executives attributed in large part to cost overruns on fixed-price contracts.Such contracts have high margins but leave defense contractors vulnerable to inflationary pressures that have dented U.S. corporate earnings in the last few years. Boeing has lost more than $2 billion on its delayed program to deliver two heavily retrofitted Boeing 747-8s for use as U.S. presidential aircraft known as Air Force One.Boeing’s shares closed down about 1% on Friday and have lost about 41% so far this year. (This story has been refiled to correct a typographical error in paragraph 12) More

PITTSBURGH (Reuters) -At a meeting of United Steelworkers union officials this week, presidential politics was off the agenda, a departure from past election-year gatherings and a sign of the division between USW members and union bosses over the candidates. The leadership of the USW – a union of 1.2 million U.S. and Canadian workers from the steel, paper and energy industries as well as government workers – in July endorsed Democratic party candidate Kamala Harris, handing her an early victory just a day after President Joe Biden withdrew from the race against Republican Donald Trump. But USW officials failed to mention Harris by name or ask the 300 local officials at a national oil bargaining conference to recommend members to campaign or vote for her. Still, attendees did see presentations about legislative proposals the union is pursuing in Congress and with the Biden administration.The omission underscores the tensions within union ranks ahead of the Nov. 5 election, a race that polls show is essentially tied – leaving the outcome dependent on how union workers and others in battleground states vote. Union workers have traditionally formed a core part of the Democratic base but the dynamic has shifted in recent election cycles with Trump peeling away support from working-class, white voters.Most oil workers come from states like Texas, Louisiana, Oklahoma and California that are not expected to be decisive in determining the outcome of the election.Other major unions like the United Auto Workers have also backed the Harris campaign. But the powerful Teamsters union on Wednesday dealt a blow to her campaign by choosing not to endorse either presidential candidate. The 1.3-million-member transportation workers union last failed to endorse a Democrat, President Bill Clinton, in 1996.The Teamsters released two surveys of rank-and-file membership that showed they prefer Trump over Harris. Trump used the Teamsters survey results to proclaim he had won the Teamsters’ rank-and-file endorsement. Still, Teamsters regional councils that represent hundreds of thousands of members and retirees in Michigan, Wisconsin, Nevada and western Pennsylvania endorsed Harris. The Harris campaign declined to comment. Her campaign has previously said that Harris will fight for union workers and if elected, would work with Congress to pass legislation making it easier to organize and “end union busting once and for all.”The oil-bargaining conference, just six weeks before the election, was also unlike prior conferences that featured dozens of members wearing pro-Trump MAGA red baseball caps. Attendees in Pittsburgh have been largely silent about the presidential election, only discussing it when asked by Reuters reporters. “I’d say 80% to 90% of USW oil workers will vote for Trump,” said a Texas union leader who asked not to be identified by name to maintain relationships within the union. However, he said “out of the entire USW, the majority will vote for Harris.”BEING LEFT BEHIND The decision to avoid discussing the election, according to a regional official, was designed to prevent a public split between the USW’s national and local officials in its oil bargaining group. USW President David McCall said in an interview with Reuters that he wanted to keep the oil bargaining group members laser-focused on 2026 labor contract topics, and did not raise the election or seek a separate vote on the candidates.”I wanted to concentrate on the oil industry itself, just generally about the community and solidarity, that’s the role I’m playing,” McCall said.The national leadership’s July endorsement of Harris reflected her campaign’s responses to union questionnaires sent to both presidential candidates.“[The Harris-Walz campaign] has given us the knowledge that they’re in line with our priorities as a union and we just don’t have any other information to compare if we don’t get a response from the other,” said Mike Smith, chairperson of the USW’s National Oil Bargaining Program. Interviews with oil local officials at the conference anecdotally revealed a strong preference for former President Trump, with many saying the Democrats’ priorities did not align with theirs.”They believe the Democratic Party has left them behind, from the promotion of electric vehicles, which limits oil demand, to the adoption of a new stricter fuel standard that increases the cost of fuel,” said one union member from Texas, who asked not to be identified by name.A Louisiana union member attending the conference said he is voting for Trump because he is the candidate for the Republican party, which he said would protect his economic interests.”It’s not pro-Trump,” said the man, who asked not be identified. “It’s in my best interest. I want to keep my money.”A third official said the absence of overt political caps or campaign buttons was intentional. “Many people here are voting for Trump, but they just don’t want to talk about it,” the union member told Reuters. More

NEW YORK (Reuters) -Wall Street closed flat on Friday, hovering near the previous session’s record-high close for the Dow and S&P 500, while the dollar firmed as investors digested the Federal Reserve’s 50-basis-point cut midweek that started a rate reducing cycle.Days after the rate cut, two Fed governors aired opposing views over prospects for inflation, underlining the scale of debate over a move Chair Jerome Powell positioned as safeguarding a resilient economy rather than an emergency response to weaker jobs data. All three major U.S. stock indexes ended the week higher, not far off all-time peaks hit on Thursday as buyers piled in to riskier assets.Markets are fully pricing in a cut of at least 25 bps in November, with expectations for a cut of 50 bps given a 48.9% chance, according to CME’s FedWatch Tool.The 50 bps rate cut has made investors think about “risks below the surface they do not know about” and want to position for “risks of the unknown”, said Michael Matousek, head trader at U.S. Global Investors. “The other question is if the soft landing is going to work, so that might be wearing on investors a little bit, raising some concerns,” he added, referring to the ideal economic scenario where inflation cools without triggering a recession.The Dow Jones Industrial Average closed up 0.09%, to 42,063.36, the S&P 500 ended down 0.19%, to 5,702.55 and the Nasdaq Composite rounded out the week 0.36% lower, at 17,948.32. The Dow’s gains were powered by Nike (NYSE:NKE), whose shares climbed after saying former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as CEO.The MSCI index of world stocks drooped 0.21%, to 837.69 after jumping on Thursday to a record high. Utilities outperformed, with the boosted by Constellation Energy whose stock soared more than 20% on news of a deal with Microsoft (NASDAQ:MSFT) to reopen part of a mothballed nuclear plant to power artificial intelligence projects.U.S. OUTLOOK ECHOES ABROADRounding off a busy week for monetary policy, the Bank of Japan left rates unchanged. Markets had been expecting rates to remain steady, but Governor Kazuo Ueda tempered expectations around imminent rate hikes. The U.S. economic outlook also rippled into the Bank of Japan’s meeting. Ueda said uncertainty around the world’s largest economy and market volatility could impact its policy moves.The yen eased after the meeting and was last seen 0.94% weaker against the greenback to 143.97 per dollar. [FRX/] The dollar climbed to a two-week high against the yen after Ueda’s remarks.The dollar gained ground after suffering losses earlier in the week. The index, which measures the greenback against a basket of currencies, was up 0.12% to 100.79.European stocks had fallen earlier from two-week highs, with automakers leading the slide after Mercedes-Benz (OTC:MBGAF) cut a profit margin target, citing weakness in China. (EU)In China, the central bank kept its benchmark lending rates on hold, countering expectations for a move lower. Chinese blue chips edged up 0.2% but remained close to a seven-month low touched earlier in the week.Downbeat data in recent days has raised hopes of aggressive stimulus to prop up the world’s second largest economy. Sterling initially weakened after the Bank of England held rates steady on Thursday before turning around and strengthening 0.23% to $1.3314. Data on Friday showed British retail sales rose by a more than expected in August.Commodities also held on to their weekly gains. Gold touched a record high at $2,614 an ounce.Two major oil benchmarks ended lower on the day, but more than 4% higher on the week.Brent futures settled down 0.52%, at $74.49 a barrel. U.S. WTI crude futures settled down 0.4%, to $71.92.[O/R] More

(Reuters) -Canada’s main stock index on Friday inched past the record high it hit a day earlier, helped by gains for the shares of gold miners and uranium producers but the move was limited as investors took stock of recent advances for the market.The Toronto Stock Exchange’s S&P/TSX composite index ended up 1.28 points at 23,867.55, moving past the record closing high it posted the previous day.For the week, the index was up 1.3%, its sixth weekly gain in the last seven weeks, after the Federal Reserve cut interest rates for the first time in four years, boosting investor sentiment globally.”Today, I think the market (is) just taking a bit of a breather,” said Allan Small, senior investment advisor at Allan Small Financial Group with iA Private Wealth. “I haven’t really seen anything that would warrant caution.”Domestic data was upbeat. It showed retail sales rising 0.9% in July from June, eclipsing expectations for a gain of 0.6%, while a preliminary estimate showed sales increasing 0.5% in August.The materials group, which includes fertilizer companies and metal mining shares, added 0.6% as the price of gold climbed 1.3% to notch a record high.Uranium producers were among the biggest gainers, with shares of Cameco Corp (TSX:CCO) adding 8.1%.Utilities and consumer staples both gained 0.5%, while industrials were a drag, falling 0.9%, including declines for railroad shares.Energy also lost 0.9% as the recent rebound in oil prices paused. U.S. crude oil futures settled 3 cents lower at $71.92 a barrel. More

LIMA (Reuters) – Peru’s central bank expects that the Andean nation’s economy will grow 3.1% this year and a further 3.0% in 2025, it said in a report on Friday, maintaining expectations for a rebound after gross domestic product (GDP) contracted by 0.6% last year.Central bank chief Julio Velarde said in a presentation that the 3.1% growth expectation was “probably biased to the upside.”The bank raised its fiscal deficit forecasts to 3.3% of GDP this year, from a prior estimate of 2.8%, and to 2.0% next year from a previous forecast of 1.6%, which Velarde attributed to less revenue and more public investment.Peru has this year set a rule not to exceed a deficit of 2.8% of GDP.Velarde pointed notably to government support for struggling state oil firm Petroperu, which last week approved a further $1.75 billion in financing after its directors resigned.Financial bailouts to Petroperu should this year be equivalent to 0.66% of GDP, he said.The monetary authority also expects a $21.67 billion trade surplus this year, slightly under the previous estimate but which would nevertheless break a fresh record in spite of lower prices for copper amid lower demand prospects from China.The bank also slightly increased its inflation forecast for this year to 2.3% from an earlier estimate of 2.2%. This however remains firmly within the target range of the central bank, which last week cut its benchmark rate by 25 basis points to 5.25%.The government, meanwhile, has predicted the economy will grow 3.2% this year and 3.1% in 2025. In July, the economy grew nearly 4.5%, the fourth consecutive month of growth, continuing a recovery from adverse climate and anti-government protests that slowed the country’s key mining industry last year.The South American country, a major world supplier of copper, is currently battling extensive forest fires that have burned through crop lands and hit some archaeological zones. More

“Based on what we know now, we believe the FOMC probably leans toward downshifting to a 25 bps pace going forward,” Economists at Wells Fargo said in a recent note, flagging the updated Fed’s summary of economic projections, or so-called dot plot. The Fed delivered a 50 basis point rate cut on Sept. 18 and signaled that it could deliver two further 25bps cuts this year and a percentage point cut next year.Fed Governor Michelle Bowman was the lone dissenter against the larger cut, favoring a smaller 25bps cut at the September meeting, but the dot plot showed “a meaningful share of the Committee is in no hurry to make 50 bps cuts the default move,” the economists added.The Fed’s big rate cut was an effort to front-load the initial policy easing, Wells Fargo suggests, as most members of the FOMC didn’t “want to see any further weakness in the labor market.”But hopes for another jumbo 50 bps cut could be revived should incoming labor market signals unexpected weakening. The next two employment reports, slated for Oct. 4 and Nov. 1, will be critical to the monetary policy outlook.”An unexpected slowdown in payroll growth or larger-than-anticipated rise in the unemployment rate might push us to project another 50 bps move at the November 7 FOMC meeting,” Wells Fargo said. More