2025-08-19 18:06

NEW YORK, Aug 19 (Reuters) - U.S. stocks have tended to fare well around the Federal Reserve's Jackson Hole gathering in August, according to a historical analysis from DataTrek Research, although the market has seen sizable moves in both directions in recent years. The Fed's annual Wyoming research conference is set for Thursday through Saturday, and Chair Jerome Powell's speech on Friday is expected to be the main event for markets. Sign up here. DataTrek looked at the benchmark S&P 500 (.SPX) , opens new tab in the five trading days before and after the Fed chair's speech since 2010. The index gained an average of 0.9% over the period, with the bulk after the speech. "This suggests that markets get incremental clarity from the chair’s speech, which in turn boosts equity valuations," Nicholas Colas, DataTrek's co-founder, said in a research note. This year, the S&P 500 has slipped in the lead-up to the speech so far, Colas said in the note published early Tuesday. "This goes against the usual pattern, so we would not be surprised to see the index rally modestly through Thursday," he said. One notable exception to the trend was in 2022, when the index slumped 7.4% in the 10-day period. That year at Jackson Hole, Powell warned of slower growth as the Fed fought high inflation. The S&P 500 fell over 19% for the full year 2022 as the Fed raised interest rates. In 2023, the index gained 3.3% in the studied period. DataTrek noted the S&P 500 fell in 2013 and 2015 when Fed chairs Ben Bernanke and Janet Yellen did not attend the symposium. This year, investors are eager to see if Powell reinforces expectations of a central bank interest rate cut at its September 16-17 meeting. Recent weak labor market data bolstered those expectations. Fed Fund futures on Tuesday were pricing in an 84% chance of such a move, according to LSEG data. https://www.reuters.com/business/us-stocks-tend-gain-around-feds-jackson-hole-summer-conference-analysis-shows-2025-08-19/

2025-08-19 17:47

Bessent says he and Trump 'laser-focused' on reducing debt Rebates for Americans would come later, Bessent says Cut in interest rates could reduce housing inflation later, Bessent says WASHINGTON, Aug 19 (Reuters) - U.S. Treasury Secretary Scott Bessent said he expects a big jump in revenues from sweeping tariffs imposed by President Donald Trump, and said the money would be used first to start paying down the federal debt, not to give rebate checks to Americans. Bessent, speaking in an interview on CNBC's "Squawk Box," said he expected to substantially revise upward his earlier estimate of $300 billion in revenues from the tariffs, but declined to be more specific. Sign up here. Bessent said he had not spoken with Trump about the idea of using funds from the tariffs to create a dividend for Americans, but stressed that both of them were "laser-focused" on paying down the debt. "I've been saying that tariff revenue could be $300 billion this year. I'm going to have to revise that up substantially," Bessent said. "We're going to bring down the deficit to GDP. We'll start paying down the debt, and then at that point that can be used as an offset to the American people." The U.S. economy could return to the "good, low-inflationary growth" of the 1990s, Bessent said, but he blamed higher interest rates for problems plaguing some pockets of the economy, singling out housing and lower-income households with high credit card debt. A cut in the Federal Reserve's key interest rate - which Trump has continually pressed for - could help facilitate a boom or pickup in home building, which would help keep prices down in one to two years, he said. The U.S. Census Bureau on Tuesday reported a small increase in groundbreaking for single-family homes and permits for future construction in July, even as high mortgage rates and economic uncertainty continued to hamper home purchases. Trump's wide-ranging import tariffs have kept the Federal Reserve from lowering interest rates this year, with most central bank policymakers wary of easing borrowing costs until they have more confidence the levies will not rekindle inflation, which has yet to return to the Fed's 2% target. Recent indications of softening in the job market, however, have largely convinced investors that the Fed will cut rates by a quarter of a percentage point when it meets in mid-September. That expectation has helped bring down mortgage rates in recent weeks. Bessent has previously said a 50-basis-point cut in rates was warranted. https://www.reuters.com/business/bessent-says-us-tariff-revenues-rise-substantially-focus-reducing-debt-2025-08-19/

2025-08-19 17:17

S&P expects tariff revenue to offset fiscal impact of tax-cut, spending bill US budget deficit grew in July despite increased customs duty collections S&P warns of potential rating downgrade if deficits rise further Aug 19 (Reuters) - S&P Global on Monday affirmed its "AA+" credit rating on the U.S., saying the revenue from President Donald Trump's tariffs will offset the fiscal hit from his massive tax-cut and spending bill. Trump signed the "One Big Beautiful Bill Act" into law in July after it was passed by the Republican-controlled Congress. The bill, which delivered new tax breaks, also made Trump's 2017 tax cuts permanent. Sign up here. "Amid the rise in effective tariff rates, we expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation, which contains both cuts and increases in tax and spending," S&P said in a statement. "At this time, it appears that meaningful tariff revenue has the potential to offset the deficit-raising aspects of the recent budget legislation." The U.S. reported a $21 billion jump in customs duty collections from Trump's tariffs in July, but the government budget deficit still grew nearly 20% in the same month to $291 billion. Interest on the public debt also continued to grow, hitting $1.013 trillion in the first 10 months of the fiscal year, an increase of 6%, or $57 billion, over the prior-year period due to slightly higher interest rates and increased debt levels. Since returning to power in January this year, Trump has launched a global trade war with a range of tariffs that have targeted individual products and countries. The Republican president has set a baseline tariff of 10% on all imports to the U.S., as well as additional duties on some items and trading partners. IMPACT OF TARIFFS S&P, which became the first ratings agency to cut the pristine U.S. government rating in 2011, said the outlook on the U.S. rating remains stable. The ratings agency said it expects the Federal Reserve, which Trump has criticized this year for not cutting interest rates, "to navigate the challenges of lowering domestic inflation and addressing financial market vulnerabilities." It projected the country's general government deficit to average 6.0% of GDP during the 2025-2028 period, down from 7.5% in 2024 and from an average 9.8% of GDP in 2020-2023. S&P said it could lower the rating over the next two to three years if already high deficits increase. "The ratings could also come under pressure if political developments weigh on the strength of American institutions and the effectiveness of long-term policymaking or independence of the Federal Reserve," it said. S&P, however, said it could raise the U.S. rating in the event of sustained economic growth and adjustments to the U.S. fiscal profile that would diminish recent increases in the country's debt burden. There was no reaction in markets on Tuesday to S&P's credit rating affirmation, which follows a U.S. sovereign credit downgrade by Moody's in May, when that ratings agency cut the triple-A U.S. rating by one notch, citing rising debt levels. The U.S. national debt load surged above a record $37 trillion last week. James Ragan, co-chief investment officer and director of investment management research at D.A. Davidson, said the S&P rating affirmation was an acknowledgment of the meaningful tariff revenue generated so far. "That's all good revenue (coming) in, but that's also a drag on the economy, so I think we don't know the impact of that going forward," he said. https://www.reuters.com/business/sp-affirms-aa-credit-rating-us-cites-impact-tariff-revenue-2025-08-19/

2025-08-19 14:38

Drop in inflation rate aided by lower gasoline prices Fall in CPI rate offset partly by food, shelter costs Share of CPI basket above 3% is at 37.3%, StatsCan said OTTAWA, Aug 19 (Reuters) - Canada's annual inflation rate eased to 1.7% in July from 1.9% in the prior month as lower year-on-year gasoline prices kept the consumer price index low, data showed on Tuesday. Economists also cheered the three-month average of the core measures, which eased to below 3% after several months, boosting hopes of a rate cut in September. Sign up here. Analysts polled by Reuters had forecast the annual inflation rate at 1.8% and the monthly inflation rate at 0.3%. The CPI increased by 0.3% in July from 0.1% in June on a monthly basis, Statistics Canada said. Gasoline prices dropped by 16.1% on a yearly basis in July, following a 13.4% decline in June. On a monthly basis the price of the fuel dropped as geopolitical tensions eased and crude oil-producing nations increased output. The elimination of a carbon levy on petrol purchases has helped bring down the cost of the fuel on a yearly basis and is expected to maintain downward pressure on the CPI basket for another eight months. The overall consumer price index has held below the mid-point of the Bank of Canada's 1% to 3% target range, even as there are signs of rising prices of food. Excluding gasoline, the CPI rose 2.5% in July, StatsCan said. Core measures of inflation, which are closely tracked by the Bank of Canada, have remained resilient and hovered around the top of the bank's preferred range of CPI. The share of the CPI basket which is above 3% continues to be elevated at over 37%, data showed. The average of the three months of annualized core measures slipped to 2.4% in July, the first time since September last year, said Doug Porter, chief economist at BMO Capital Markets. "If that more recent pace in core is maintained, and the economy remains soft, we believe that will eventually set the stage for BoC cuts," he said, but cautioned the three-month annualized metric could swing wildly with one month of aberration in data. Money markets are betting the odds of a rate cut on Sept. 17 at 40%, up from 32% before the inflation data, after the bank has stayed put at 2.75% for its last three rate decision meetings. The Canadian dollar weakened and was trading down 0.23% after the inflation data. Two-year government bond yields were down 3.5 basis points to 2.704%. The main drivers of the increase in costs were a rise in food prices and shelter costs, StatsCan said. Food prices, which contributes close to 17% to the overall CPI basket, rose by 3.3% in July from 2.9% in June. Shelter costs, the biggest component of the CPI basket, rose 3% in July from 2.9% in June, marking the first increase since February last year. https://www.reuters.com/world/americas/canadas-annual-inflation-rate-eases-17-july-boosting-some-hopes-rate-cut-2025-08-19/

2025-08-19 13:35

WASHINGTON, Aug 19 (Reuters) - U.S. Treasury Secretary Scott Bessent on Tuesday accused India of profiteering from its sharply increased purchases of Russian oil during the war in Ukraine, saying Washington viewed the situation as unacceptable. Bessent told CNBC in an interview that Russian oil now accounted for 42% of India's total oil purchases, up from under 1% before the war, and contrasted that with longtime buyer China, whose Russian oil purchases had increased to 16% from 13%. Sign up here. "India is just profiteering. They are reselling," Bessent said. "What I would call Indian arbitrage - buying cheap Russian oil, reselling it as product has just sprung up during the war - which is unacceptable," he said. U.S. President Donald Trump this month announced an additional 25% tariff on Indian goods as a punishment for New Delhi's purchases of Russian oil, bringing the total additional tariffs announced since he took office to 50%. Trump has credited the Indian tariffs as piling pressure on Russian President Vladimir Putin to agree to work toward ending the war in Ukraine, but has stopped short of imposing similar tariffs on China over its purchases of Russian oil. Bessent, asked about the Trump administration's failure to move ahead with similar tariffs on China, said the situation was "completely different" given that Beijing was a longtime buyer and had not engaged in the kind of "arbitrage" done by India. U.S.-India relations have been strained by Trump's tariffs after months of forecasts by the U.S. president and other officials that they were close to reaching an agreement with Prime Minister Narendra Modi's government on a trade deal that would have lowered the tariff rate. India on Tuesday temporarily suspended an 11% import duty on cotton until September 30, a move seen as a signal to Washington that New Delhi is willing to address U.S. concerns on agricultural tariffs. It came after the abrupt cancellation of a planned visit by U.S. trade negotiators to New Delhi from August 25-29. https://www.reuters.com/business/energy/us-treasury-chief-bessent-accuses-india-profiteering-russian-oil-purchases-2025-08-19/

2025-08-19 12:52

TORONTO, Aug 19 (Reuters) - Canada's main stock index is set to extend its record-setting run this year and next as lower borrowing costs along with potentially greater clarity on U.S. tariffs offset expected pressure on corporate profits, a Reuters poll found. The median prediction of 20 equity strategists and portfolio managers in the August 7-18 poll was for the S&P/TSX Composite Index (.GSPTSE) , opens new tab to rise 2.3% to 28,553 by year-end, moving above last Wednesday's record closing high and easily eclipsing the 26,250 mark expected in a May poll. Sign up here. The index is forecast to reach 30,000 by the end of 2026, a gain of over 7%, versus the previous prediction of 27,750. "We are embracing the idea of a renewed bull market for the S&P/TSX Composite Index," said Philip Petursson, chief investment strategist at IG Wealth Management. "With the U.S. tariff issues largely known and/or resolved, we have a clearer path forward for the impact on stocks." The TSX index has rallied more than 25% from an April low as investors globally have become less fearful of U.S. tariffs. The U.S. has increased tariffs on Canadian goods to 35% from 25% but products covered by the U.S.-Mexico-Canada Agreement are exempt from duties. About 92% of Canadian exports to the U.S. in June were exempt under that trade agreement. Canada's jobs market could deteriorate in the near-term but the prospect of more certainty on tariffs and additional interest rate cuts could provide a better set-up for the economy going into next year, said Michael Dehal, a senior portfolio manager at Dehal Investment Partners at Raymond James. The Bank of Canada has opened the door to additional interest rate cuts if upward pressure on prices from trade disruptions is contained. The central bank has lowered its benchmark rate by 225 basis points since June 2024 to 2.75%. Still, six of 11 analysts that answered a separate question said corporate earnings would be marginally lower in the second half of 2025 compared with the first half. "Consumer-facing sectors are likely to remain under pressure, and the ramp-up in AI investment is increasing costs without yet delivering clear revenue uplift," said Victor Kuntzevitsky, a portfolio manager at Stonehaven, Wellington-Altus Private Counsel. "However, resource and export-oriented companies may help cushion the overall impact." The energy and materials sectors, which include oil and metal mining shares, account for 30% of the Toronto market's weighting. While the price of oil has slipped since the start of the year, gold has surged 27%. "Tactical pullbacks should be viewed as opportunities to add exposure, as the bull market appears well supported by underlying fundamentals," said Angelo Kourkafas, a senior global investment strategist at Edward Jones. (Other stories from the Reuters Q3 global stock markets poll package) https://www.reuters.com/world/americas/canadas-tsx-stock-index-predicted-rise-23-by-year-end-trade-certainty-hopes-2025-08-19/