2024-11-07 16:54

LONDON, Nov 7 (Reuters) - U.S. President Donald Trump's pledge to impose a universal 10% tariff on imports and 60% on Chinese goods is likely only a starting point for negotiations, ratings agency S&P Global said in a note on Thursday. Tariffs are unlikely to be imposed at those levels, but were Trump to follow though, the universal 10% tariff could add as much as 1.8 percentage points to U.S. inflation, the report said. It added that this would trigger a resurgence in inflation in the first year rather than having an ongoing inflationary effect, and hit output by as much as 1 percentage point. The increase in tariffs to 60% on China could add as much as 1.2 percentage points to inflation and the hit to output could be around 0.5 percentage points, S&P said. S&P said it could lower its rating on the U.S., currently at AA+, in the next two-three years if political developments weigh on the strength of American institutions, jeapordize the dollar as the world's leading reserve currency, or if the already-high U.S. deficit rises further. S&P's current fiscal projections assume the government deficit will remain around current levels, it added. Sign up here. https://www.reuters.com/business/trump-unlikely-impose-full-tariff-plan-sp-global-2024-11-07/

2024-11-07 15:58

BRASILIA, Nov 7 (Reuters) - Economists raised their projections for Brazil's borrowing costs at the end of its tightening cycle after the central bank accelerated its rate hike and signaled that even with a more aggressive rate path, inflation remains above target. On Thursday, futures markets also began pricing in expectations that Brazil's central bank will continue raising rates through July next year, with the Selic benchmark rate projected to surpass 14%. Policymakers on Wednesday raised rates by 50 basis points to 11.25% and left the door open for further increases, underscoring that both the pace and total scope of the tightening cycle are firmly tied to their commitment to returning inflation to target. The central bank, which incorporates market interest rate forecasts into its own projections, raised its inflation estimate for the relevant horizon to 3.6% for the second quarter of 2026, exceeding the official target of 3%. This projection assumes rates peaking at 12.5% next year. When the bank's monetary policy committee, Copom, began raising rates in September, it had projected inflation at 3.5% for the relevant horizon, with a lower terminal Selic rate of 11.5%. "This indicates two things: other inflationary pressures are outweighing the effect of the projected monetary tightening, and the Copom's - undisclosed - 'flight plan' likely envisions a terminal Selic rate above 12.5%," XP wrote in a note to clients. XP now expects the Selic to reach 13.25% by the end of the tightening cycle, up from a previous forecast of 12%, implying four additional 50 basis-point increases ahead. Meanwhile, UBS BB raised its forecast for the Selic to peak at 12.75% in March, up from a prior forecast of 12.25% in January. JP Morgan revised its terminal Selic rate to 13%, noting that it initially expected a coordinated global easing to lower exchange rate pressures, which would have allowed Brazil's central bank to pursue a smaller rate hike cycle than market consensus anticipated. "However, the global environment now appears more uncertain, and reduced easing abroad is likely to keep the real more depreciated than we initially expected," it said. Sign up here. https://www.reuters.com/markets/rates-bonds/economists-see-higher-peak-brazils-rates-central-bank-keeps-tightening-2024-11-07/

2024-11-07 15:36

JOHANNESBURG, Nov 7 (Reuters) - South African assets recouped the previous day's losses on Thursday ahead of a Federal Reserve interest rate announcement as the dollar gave back some of its gains linked to Donald Trump's U.S. election win. At 1527 GMT, the rand traded at 17.28 against the dollar , about 2.1% stronger than its previous close. The local currency had fallen about 1.5% on Wednesday. The dollar cooled from the four-month high hit on Wednesday and was last down about 0.8% against a basket of currencies. Trump recaptured the White House four years after leaving office, spurring so-called "Trump trades" on Wednesday as financial markets expect his policies to bring economic growth in the short term but also potentially inflationary pressures. On the Johannesburg stock market, the blue-chip Top-40 (.JTOPI) , opens new tab index closed about 0.8% higher, recovering about half its losses from Wednesday. The benchmark 2030 government bond was also stronger, with the yield down 20.5 basis points to 9.195%. The Fed is expected to reduce interest rates by 25 basis points later on Thursday, with markets sensitive to any changes in the outlook for interest rates in the world's biggest economy. Sign up here. https://www.reuters.com/markets/currencies/south-african-assets-stage-recovery-eyes-fed-decision-2024-11-07/

2024-11-07 13:17

AMSTERDAM, Nov 7 (Reuters) - Increasing geopolitical tensions and rising trade barriers create economic risks and make it harder to counter new shocks to the international financial system, European Central Bank governing council member Klaas Knot said on Thursday. "We just had a presidential debate in the U.S. where the word tariff was used frequently, and there are more places in the world where trade barriers are being erected. That will provide a whole set of new risks," Knot said during an interview with students at the University of Amsterdam. "It will negatively impact our capacity to come together and jointly solve global problems." Sign up here. https://www.reuters.com/business/finance/trade-barriers-create-financial-risks-ecbs-knot-says-2024-11-07/

2024-11-07 12:53

LONDON, Nov 7 (Reuters) - The Bank of England cut interest rates on Thursday for only the second time since 2020 and said future reductions were likely to be gradual, seeing higher inflation and growth after the new government's first budget. Here's what Bank of England officials said in a press conference following that decision: BANK OF ENGLAND GOVERNOR ANDREW BAILEY On the Oct. 30 budget: "We provisionally expect the measures announced in the budget to boost the level of GDP by around three quarters of a percent at their peak in a year's time. This reflects the stronger and relatively front-loaded paths for government consumption and investment, more than offsetting the impact on growth of higher taxes. "Overall, fiscal policy is still expected to tighten over the forecast, but all else equal, the changes announced in the budget are expected to reduce the margin of spare capacity in the economy over the forecast period." On the impact of the budget on interest rates: "I don't think that it's sensible to conclude that the path of interest rates will be particularly different." On inflation: "We still need to see services price inflation come down more broadly to keep headline consumer price inflation at the 2% target." On the labour market: "Developments in the UK labour market continue to be very important for assessing developments in inflationary pressures. There are mixed signals from the data. Sign up here. https://www.reuters.com/markets/rates-bonds/bank-england-policymakers-speak-after-cutting-rates-2024-11-07/

2024-11-07 12:51

Nov 7 (Reuters) - AngloGold Ashanti (AU.N) , opens new tab rebounded to a third-quarter profit on higher gold prices, after suffering a loss in the corresponding period due to restructuring costs and other one-off factors, the miner said on Thursday. The gold miner reported headline earnings of $236 million in the quarter to Sept. 30, compared to a headline loss of $194 million during the same period last year. AngloGold's income during the September quarter of 2023 was impacted by costs associated with switching its primary listing from Johannesburg to New York, and moving its headquarters from South Africa to London. There were also impairments and losses on derecognition of assets and insurance claims in the prior period which did not recur in the current period, the company said. The increase in earnings came despite a 3% decline in production and was partly offset by higher operating costs, losses on non-hedge derivatives, higher care and maintenance costs, lower equity earnings from associates and non-managed joint ventures and higher taxation. AngloGold said it expects to complete the acquisition of Egypt-focused smaller rival Centamin (CEY.L) , opens new tab this month after the target company's shareholders approved the $2.5 billion deal on Oct. 28. AngloGold's proposed deal with rival Gold Fields (GFIJ.J) , opens new tab to combine their neighbouring Tarkwa and Iduapriem mines in Ghana and create Africa's biggest gold mine, is still awaiting regulatory approvals by the west African country's government. Sign up here. https://www.reuters.com/markets/commodities/anglogold-ashanti-q3-earnings-rebound-higher-gold-price-2024-11-07/