2025-02-07 16:20
NEW YORK, Feb 7 (Reuters) - Private investment industry groups on Friday opposed U.S. President Donald Trump's plan to close a loophole that allows private equity and hedge fund financiers to pay a lower capital gains tax rate on much of their income. "We encourage the Trump administration and Congress to keep this sound tax policy in place and unleash more long-term investment that supports jobs, workers, small businesses, and local communities," American Investment Council President Drew Maloney said. White House press secretary Karoline Leavitt told reporters on Thursday that Trump had laid out his tax priorities, including closing the so-called carried interest tax loophole. It could help offset planned tax cuts in other areas, such as on overtime and tips. In 2021, the Congressional Budget Office estimated that closing the loophole would raise tax revenue by $14 billion over 10 years. A change in the tax rule, which would affect the compensation of private fund managers, has been discussed for more than a decade. Fund managers have part of their compensation tied to the fund's profit. It is taxed as a long-term capital gain, which is lower than the income tax rate. "Carried interest encourages smart, high-risk investments in innovative high-growth startups," the National Venture Capital Association said, adding the current system has boosted technologies such as artificial intelligence and cryptocurrency. "A change now will disrupt that progress and disproportionately harm small investors." Maloney said since Trump's 2017 tax overhaul, the private equity industry has invested more than $5.6 trillion in the U.S. economy and supported 36,000 small businesses. Sign up here. https://www.reuters.com/world/us/investment-group-opposes-trumps-carried-interest-tax-hike-plan-2025-02-07/
2025-02-07 15:46
JOHANNESBURG, Feb 7 (Reuters) - South Africa's rand firmed on Friday after President Cyril Ramaphosa said his government would launch a second wave of reforms to try to boost economic growth. At 1531 GMT, the rand traded at 18.37 against the U.S. dollar , about 0.3% firmer than its previous close. The rand has gained about 1.8% since its close last Friday. Ramaphosa, in his annual State of the Nation Address (SONA) on Thursday, promised reforms aimed at lifting South Africa's growth above 3%, by boosting struggling state companies like power utility Eskom and logistics group Transnet and investing in infrastructure. "The one thing the SONA did not do was weaken the ZAR. On the contrary, it has been a very strong week for the ZAR," said ETM Analytics in a research note. "It may have started the week on the defensive but appears to be ending it firmly on the front foot (and) now looks set to target levels closer to 18.4000 ahead of the weekend," the note added. The rand tumbled on Monday, but managed to stage a recovery, after U.S. President Donald Trump said he would cut off funding for South Africa because he said, without citing evidence, that the country was confiscating land. Ramaphosa said on Thursday that his country "will not be bullied". On the stock market, the Top-40 (.JTOPI) , opens new tab index closed about 0.5% higher. South Africa's benchmark 2030 government bond was weaker, with the yield up 1.5 basis points to 9.065%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-gains-president-promises-reforms-2025-02-07/
2025-02-07 15:46
JOHANNESBURG, Feb 7 (Reuters) - South Africa's rand was steady in early trading on Friday, after President Cyril Ramaphosa said his government would launch a second wave of reforms to try to boost economic growth. At 0752 GMT, the rand traded at 18.4325 against the dollar , not far from its previous close. South African investors are cautiously wrapping up a week which started with U.S. President Donald Trump saying he would cut off funding for South Africa because he said, without citing evidence, that the country was confiscating land. Ramaphosa said on Thursday that his country "will not be bullied". Ramaphosa, in his annual state of the nation address, also promised reforms aimed at lifting South Africa's growth above 3%, by boosting struggling state companies like power utility Eskom and logistics group Transnet and investing in infrastructure. "It (the rand) may have started the week on the defensive but appears to be ending it firmly on the front foot as the USD-ZAR now looks set to target levels closer to 18.4000 ahead of the weekend," ETM Analytics said in a research note. The dollar last traded about 0.1% stronger against a basket of currencies, as investors await U.S. nonfarm payroll data to gauge the health of its labour market. On the stock market, the Top-40 (.JTOPI) , opens new tab index last traded about 0.5% higher. South Africa's benchmark 2030 government bond was weaker in early deals, with the yield up 2 basis points to 9.07%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-steady-president-promises-reforms-2025-02-07/
2025-02-07 15:43
Feb 7 (Reuters) - Traders of short-term interest-rate futures on Friday now expect the Federal Reserve to cut interest rates just one time this year, backing away from earlier bets on two rate cuts starting in June, after government data showed the labor market remains strong and a closely-watched survey showed a jump in consumers' inflation expectations. The market-based probability of a June interest-rate cut dropped to barely above 50% after the University of Michigan Surveys of Consumers showed households think inflation a year from now will be 4.3%, a full percentage point higher than they thought it would be last month, and an earlier report from the Labor Department showing the unemployment rate was 4% in January. Before the reports traders had seen about a 63% chance of a June rate cut. Sign up here. https://www.reuters.com/markets/us/traders-now-see-just-one-fed-rate-cut-this-year-2025-02-07/
2025-02-07 15:40
MEXICO CITY, Feb 7 (Reuters) - Mexico's annual inflation rate slowed slightly more than expected in January, official data showed on Friday, after the central bank accelerated the pace of its interest rate cuts and signaled more monetary easing ahead. In Latin America's second-largest economy, the headline annual inflation rate hit 3.59% in January, statistics agency INEGI said, down from 4.21% the previous month and just below the 3.61% expected by economists polled by Reuters. The improving inflation environment, with consumer price increases now within the Bank of Mexico's 2% to 4% target range, and an economic contraction reported late last year, have allowed policymakers to reduce borrowing costs. The central bank, known as Banxico, announced on Thursday a 50-basis-point cut to its benchmark interest rate to 9.5%, doubling the pace of its easing cycle and saying it could cut by a similar magnitude in the future as inflation cools. "This is a good inflation report, supporting Banxico's dovish tilt yesterday," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said. "Inflation in Mexico hit cyclical lows recently, thanks in large part to subdued core pressures, giving Banxico some space to start normalizing monetary policy. But the Mexican peso selloff in Q4 remains a near-term risk to price stability." Mexican President Claudia Sheinbaum on Friday applauded January's "very good" inflation figures, as well as the central bank's rate decision a day before. The "very important" rate cut "speaks to the strength of the Mexican economy but also encourages investment in our country," the president said in her morning press conference. In January alone, according to INEGI, consumer prices were up 0.29%, slowing from the 0.38% rise seen in December. Economists in a Reuters poll expected a 0.31% increase. The core index, which strips out some volatile food and energy prices, rose 0.41% during the month and 3.66% on an annual basis. Market forecasts were at 0.45% and 3.70%, respectively. Sign up here. https://www.reuters.com/world/americas/mexico-inflation-slows-january-central-bank-steps-up-rate-cuts-2025-02-07/
2025-02-07 15:38
NEW YORK, Feb 7 (Reuters) - A fresh look at the pace of inflation will test the U.S. stock market in the coming week, as investors worry that President Donald Trump's tariff plans are endangering Wall Street's hopes for interest rate cuts this year. The benchmark S&P 500 (.SPX) , opens new tab remained about 1% below record-high levels, even as stocks were whipsawed this week by headlines over Trump's plans to impose tariffs on the largest U.S. trading partners. Tariffs are widely seen as inflationary, complicating the picture for the Federal Reserve. The central bank paused its rate-cutting cycle last month as it waits for data to give an all-clear sign to keep easing monetary policy. The monthly consumer price index due on Wednesday offers the latest read on inflation trends, a key investor concern. A survey of over 4,000 traders published this week showed inflation and tariffs are the factors expected to have the biggest sway on markets this year. "Inflation really is the wildcard for 2025 in terms of how it's going to impact the interest rate environment," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "In the event that we have higher inflation, it really reduces the opportunity for the Fed to continue cutting rates, and obviously markets don't like that." The January report is expected to show an 0.3% increase in CPI on a monthly basis, according to a Reuters poll. Several Wall Street analysts warned that January is traditionally a more challenging period to forecast CPI due to seasonal factors, increasing the potential for market volatility when the data is released. The pace of inflation has moderated from 40-year highs reached in 2022, allowing the Fed to cut rates last year, but it has not yet subsided to the central bank's 2% annual target. "We certainly don't want to see (CPI) heating up again," said Art Hogan, chief market strategist at B. Riley Wealth. "That would raise a concern that the Fed funds rate is going to be where it is for longer than we anticipate now." Markets are pricing in an over 80% chance that the Fed continues to hold rates steady at its next meeting in March, while roughly two cuts are expected by the end of the year, according to LSEG data. Expectations for the Fed to stay on hold in March solidified after Friday's mixed U.S. employment report. Job growth slowed more than expected in January, but an unemployment rate of 4% supported evidence of a healthy labor market. But some investors are pulling back on expectations for further easing this year. Morgan Stanley economists this week said they now only project one cut this year, in June, as opposed to two before, saying in a note that, "the path for monetary policy in 2025 remains highly uncertain." The Morgan Stanley team pointed to tariff uncertainty raising the hurdle for rate cuts. Investors this week grappled with an evolving tariff backdrop, with Trump imposing and then delaying for a month tariffs on imports from Canada and Mexico, while putting in place a 10% duty on China. Following initial news of the tariffs on Monday, the Cboe Volatility Index (.VIX) , opens new tab spiked to a one-week high of 20.42 but has since subsided to around 15. "Early in the second Trump administration, tariff threats have revived market volatility," Lawrence Gillum, chief fixed income strategist at LPL Financial, said in a written commentary on Thursday. The Fed's rate view could become clearer when Chair Jerome Powell testifies before Congress on Tuesday and Wednesday. Corporate earnings reports will also be in focus in the coming week, with results due from Coca-Cola (KO.N) , opens new tab, Cisco (CSCO.O) , opens new tab and McDonald's (MCD.N) , opens new tab. With over half of the S&P 500 reported, fourth-quarter earnings were on track to have climbed 12.7% from a year earlier, up from an estimate of 9.6% growth at the start of January, according to LSEG IBES. Earnings season overall has been a positive factor for stocks despite uncertainty around tariffs, said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "Commentary from a lot of different industries has been solid," Saglimbene said. "Demand drivers remain intact." text_section_type="notes">Wall St Week Ahead runs every Friday. For the daily stock market report, please click Sign up here. https://www.reuters.com/world/us/wall-st-week-ahead-inflation-data-test-market-tariff-talk-swirls-2025-02-07/
