2025-06-12 15:49

BRASILIA, June 12 (Reuters) - Brazil's Finance Minister Fernando Haddad on Thursday sought to prevent the country's new fiscal package from being labeled a simple tax hike, saying that the measures would allow the government to meet its fiscal target and not affect most people's daily lives. Haddad's remarks came as the executive order unveiled late on Wednesday by President Luiz Inacio Lula da Silva's administration faced initial pushback from lawmakers, with many calling for spending cuts instead of tax increases. Sign up here. The package includes higher taxes on online betting platforms, a unified income tax rate for financial investments, the elimination of lower duties applied to financial firms, and new mechanisms to limit the use of tax offsets by companies. It was designed to compensate for the rollback of a controversial tax hike on some credit, foreign exchange and private pension operations, which had also triggered a strong backlash from lawmakers and business people when it was unveiled last month. Combined with additional dividend payments from state-run companies and a planned extraordinary oil auction, the new measures are expected to bring in about 20 billion reais ($3.61 billion) this year, Haddad told reporters. "It makes no sense calling this a tax hike... We must correct the distortions in public accounts," Haddad said, as Latin America's largest economy targets the elimination of its primary deficit this year. He argued that overhauling the financial sector's tax framework would level the playing field and "doesn't impact people's lives," while the increased levies on betting platforms target "an activity that doesn't create a single job." According to a document released by the government, the new package is expected to generate 10.5 billion reais in additional revenue this year, with 10 billion reais coming from stricter rules on the use of tax offsets. Next year, when the new income taxation rules would take effect, the estimated revenue gain is 20.9 billion reais. The package faced resistance in Congress even before its formal submission, prompting Haddad to downplay criticism that it would increase the burden on companies and individuals. It also includes a 5% income tax on all currently exempt debt securities, which total 1.7 trillion reais and, according to Haddad, were creating a market distortion and costing the government 41 billion reais in lost revenue. Since taking office in 2023, the leftist Lula administration has prioritized revenue-raising measures to restore fiscal balance following a surge in public spending, particularly on social and pension programs. Many lawmakers, including from the ruling coalition, signaled they would not support new tax measures unless accompanied by spending reductions, though Congress has either blocked or watered down the cuts proposed by the government so far. ($1 = 5.5348 reais) https://www.reuters.com/world/americas/brazil-expects-annual-fiscal-boost-72-billion-new-measures-2025-06-12/

2025-06-12 14:18

June 12 (Reuters) - The Federal Reserve's path to interest rate cuts starting in September appeared to widen on Thursday, after a pair of government reports pointed to cooler inflation and signs of potential weakening in the labor market. U.S. producer prices advanced 2.6% in May from a year earlier, after rising 2.5% in April, the Labor Department reported. Taken together with tamer-than-expected increases in the Consumer Price Index in May, economists estimated that inflation by the Fed's preferred gauge of underlying price pressures, the core Personal Consumption Expenditures Price Index, likely rose in line with the Fed's 2% goal last month. Sign up here. Economists still expect the Trump administration's tariffs to push up prices and lift inflation later this year, but "the near-term trend remains favorable, enabling the (Fed) to signal next week that it still intends to begin easing policy again later this year," economists at Pantheon Macroeconomics wrote. They estimate that core PCE rose by just 0.12% in May from April, based on the latest PPI and CPI data. Economists at other Wall Street firms issued similar estimates. The Fed is nearly universally expected to leave its policy rate in the 4.25%-4.50% range at its June 17-18 meeting. Futures that settle to the Fed's policy rate show traders now expect a quarter-percentage-point reduction by September, with another such move likely in October. Before Thursday's data, traders had expected the Fed to wait until December to deliver a second rate cut. The U.S. central bank cut rates three times in 2024. A separate Labor Department report on Thursday showed initial weekly claims for jobless benefits held steady at a seasonally adjusted 248,000 for the week ended June 7, while continuing claims jumped to 1.951 million, their highest level since November 2021 and a sign that it is getting harder for unemployed workers to find a new job. "Americans, especially recent graduates, are worried about how hard it is to find a job," said Heather Long, chief economist at Navy Federal Credit Union. "If layoffs worsen this summer, it will heighten fears of a recession and consumer spending pullback." https://www.reuters.com/business/traders-boost-bets-fed-rate-cuts-after-ppi-jobless-claims-data-2025-06-12/

2025-06-12 13:54

LISBON, June 12 (Reuters) - U.S. private equity fund Lone Star has decided to sell its 75% stake in Novo Banco to French banking group BPCE in a deal that would value Portugal's fourth-largest lender at around 7 billion euros ($8.14 billion), Portuguese economic news outlet ECO said on Thursday. ECO said the "decision has been taken" and should be communicated to the market later on Thursday, without citing its sources. Sign up here. Reuters was not able to independently verify the information. Lone Star and Novo Banco declined to comment and BPCE did not immediately respond to a request for comment. If confirmed, Lone Star would be abandoning the option of an initial public offering for Novo Banco backed by the lender's management. Novo Banco was created in 2014 from the collapsed Banco Espirito Santo (BES) after a state bailout, with Lone Star buying its stake in 2017 for 1 billion euros. Between then and the end of last year, the resolution fund injected 3.4 billion euros into Novo Banco to cover losses from a portfolio of toxic assets inherited from BES, as agreed with Lone Star. The bank completed a turnaround last year, which involved selling its overseas operations and focusing solely on Portugal, sharply reducing non-performing assets and becoming profitable. As of March, Novo Banco managed 30 billion euros of deposits and 28.5 billion euros of net loans, accounting for a market share of around 9% in Portugal. Its market share of loans specifically to small and medium-sized companies was 18%. It has almost 300 bank branches and more than 4,200 employees. ($1 = 0.8600 euros) https://www.reuters.com/business/finance/lone-star-sell-portugals-novo-banco-french-bpce-report-says-2025-06-12/

2025-06-12 13:38

Dollar index at three-year lows Scandinavian currencies are star performers Safe-haven currency strength a headache for central banks LONDON, June 13 (Reuters) - The dollar has sunk to its lowest in three years as rapidly changing U.S. trade policy unsettles markets and expectations build for Federal Reserve rate cuts, fuelling outflows from the world's biggest economy. While the dollar was higher on Friday, lifted by safe haven flows as Israel launched a strike on Iran, it was still set for its biggest weekly drop in a month. Sign up here. It is also down almost 10% against a basket of major currencies this year (.DXY) , opens new tab, leaving other countries grappling with unanticipated FX moves that are having a knock-on impact on economic growth and inflation. "There's clearly solid dollar selling," said Kit Juckes, chief FX strategist at Societe Generale. Here's a look at some of the biggest movers: 1/ CROWN JEWELS Scandinavia's currencies are the standout performers against the dollar so far in 2025. The Swedish crown is up 15%, its best performance at this point in the year against the U.S. currency in at least 50 years. Norway's crown is up 13%, its best run since 2008 . Highlighting just how much of this strength stems from dollar weakness, Sweden's crown is up only 4.5% against the euro and Norway's just 2% , . Sweden is expected to cut rates this month as inflation and its economy slow, yet its currency shows no signs of weakening. In Norway, lower oil prices often temper the crown, but that dynamic has also been upended by its relationship with the dollar. 2/ SAFE-HAVEN WOES The euro , Swiss franc and Japanese yen are also among the biggest beneficiaries of the dollar's fall from grace, up roughly 10% each so far this year. But this comes at a price. Swiss inflation turned negative in May, marking the first decline in consumer prices for more than four years. The surge in the franc reduces the price of imported goods, and piles pressure on the central bank to cut rates back below 0%. European Central Bank rate setters will also have a wary eye on the single currency, which at around $1.1533 is near its highest since 2021. "In my heart-of-hearts we are going to get to $1.20 but we shouldn't get there too fast because it's deflationary," said SocGen's Juckes. Even after the recent surge, the yen remains down roughly 30% from end-2020 levels, leaving Japan to try to balance the negatives of a stronger currency with the need to demonstrate in trade talks with Washington that it is not seeking an unfair advantage from its longer-term weakness. 3/ FACTORY ASIA For years, Asian investors parked trillions of dollars in U.S. assets such as Treasuries. U.S. President Donald Trump's April 2 "Liberation Day" fired the starting gun for that capital to start flowing back to the world's manufacturing powerhouses, boosting their currencies. Taiwan's dollar surged 10% over two days in May and is up nearly 10% this year, while the Korean won has gained around 8%. Singapore's dollar , Malaysia's ringgit and Thailand's baht are all up 6% too, but China's yuan - arguably the most exposed to tariffs - has only appreciated by about 2% offshore, hemmed in by the central bank's guardrails around its onshore counterpart. China wasn't labelled a manipulator in the U.S. Treasury's latest currency report, but the lag in the yuan will not have gone unnoticed in Washington. 4/ OUTLIER Argentina's peso is an outlier, down around 15% against the dollar and one of this year's weakest performers. The reasons are domestic with the introduction of a new exchange rate regime in April allowing the peso to float freely within a gradually expanding band that started between 1,000-1,400 pesos per dollar. Still, the chaotic crash feared by some has been avoided and a recent $20 billion loan agreement with the IMF is positive. In contrast, Mexico's peso , which was under particular pressure at the start of the year from U.S. trade policy, has bounced back to near its strongest levels since August. While it could gain further if tariff spats are resolved, it is also sensitive to the U.S. economic outlook. 5/ STERLING Softer data has raised the prospect of Bank of England rate cuts and capped sterling's recent rally to more than three-year highs against the dollar. The pound is up almost 9% this year and analysts say foreign buyers may be rushing to snap up UK Plc before any further dollar weakness makes future transactions more expensive. More than $10 billion in bids for British companies were announced on Monday, this year's busiest day, according to Dealogic data. Analysts do, however, expect sterling to underperform other major currencies bar the dollar, given fiscal worries and weakening growth. "Sterling is less appealing than others (currencies) and the macro risks are elevated," said Lloyds FX strategist Nick Kennedy. https://www.reuters.com/world/europe/dollars-crown-is-slipping-fast-2025-06-12/

2025-06-12 12:36

LONDON, June 12 (Reuters) - Egypt has reached agreements with several energy firms and trading houses to buy between 150-160 cargoes of liquefied natural gas (LNG) to cover power demand from now until the end of 2026, industry sources aware of the matter told Reuters. The gas purchases, costing over $8 billion based on current prices, will add more pressure on government coffers which are already under strain to keep the lights on amid falling gas production and a cost of living crisis. Sign up here. Egypt’s hard currency crunch has delayed payments to international oil firms, curbing exploration and slowing oil and gas output. Agreements have been reached with global energy companies and trading houses including Saudi Aramco, Shell, Vitol, Trafigura, BGN, SOCAR, and PetroChina, the sources said. Between 50-60 cargoes will be used to cover this year's demand. This is on top of 75 cargoes the country has already purchased earlier this year. The rest will be for deliveries through end-2026. The cargoes were priced at a premium of $0.70-$0.75 above the gas price at the Dutch TTF hub, with a nine-month deferred payment. Cairo has the flexibility to defer cargoes and some of the companies have the option to provide Cairo with additional LNG cargoes if needed. Egypt's Ministry of Petroleum and the Egyptian Natural Gas Holding Company (EGAS) did not immediately respond to Reuters' quest for comment. Over the past two years, Egypt has endured rolling blackouts as natural gas supply fell short of demand. Egypt's own gas output in February hit its lowest level in nine years. The world's most populous Arab country returned to being a net importer , opens new tab of gas last year, buying dozens of cargoes and abandoning plans to become a supplier to Europe as its production tumbled. Egypt has bought 1.84 million tons (mt) of LNG this year, data from S&P Global Commodity Insights shows. That's almost 75% of its total for 2024. https://www.reuters.com/sustainability/boards-policy-regulation/egypt-agrees-buy-up-160-lng-cargoes-through-2026-sources-say-2025-06-12/

2025-06-12 11:42

After years of standoffs, IAEA Board of Governors rules Iran not heeding non-proliferation rules Wall Street Journal cites senior Israeli official saying strike could come as early as Sunday Decision could mean referral of Iran to UN Security Council US and Iran set to hold sixth round of nuclear talks on Sunday Trump says Israeli strike not imminent but 'could very well happen' WASHINGTON/VIENNA/DUBAI, June 12 (Reuters) - U.S. President Donald Trump said on Thursday an Israeli strike on Iran "could very well happen," and a senior Israeli official told the Wall Street Journal it could occur as soon as Sunday unless Iran agrees to halt production of material for an atomic bomb. U.S. intelligence has indicated that Israel has been making preparations for a strike against Iran's nuclear facilities, and U.S. officials have said on condition of anonymity that Israel could attack in the coming days. Sign up here. The Wall Street Journal report was the first suggestion of a potential date for an Israeli strike on its longtime foe Iran as Israel tries to block Tehran from developing a nuclear weapon. Trump on Thursday reiterated his hopes for a peaceful end to the tensions, and there was counter-speculation that the threat of an Israeli attack was a tactic intended to pressure Iran into concessions on its nuclear program at the negotiating table. "We remain committed to a Diplomatic Resolution to the Iran Nuclear Issue!" Trump wrote on his Truth Social platform. "My entire Administration has been directed to negotiate with Iran. They could be a Great Country, but they first must completely give up hopes of obtaining a Nuclear Weapon," he added. Tensions have been building as Trump's efforts to reach a nuclear deal with Iran appear to be deadlocked. U.S. and Iranian officials were scheduled to hold a sixth round of talks on Tehran's escalating uranium enrichment programme in Oman on Sunday, according to officials from both countries and their Omani mediators. Speculation about an Israeli attack has raised fears that such a move could spark a regional war and retaliatory strikes from Iran, which has vowed to destroy Israel. Axios reported on Thursday that the White House has told Israel the U.S. will not be directly involved in any Israeli strike on Iranian nuclear facilities, quoting two U.S. sources and an Israeli source familiar with the discussions. Analysts have said Israel is unlikely to act without U.S. support, citing past threats on Iran that fizzled out without Washington's backing. The Wall Street Journal said the U.S. would not provide "offensive assistance" to Israel for an attack on Iran. While the U.S. could still aid Israel with intelligence or logistics support as well as help defend Israel if Iran strikes back, it was unclear how the reported U.S. unwillingness to participate directly might influence Israeli decision making. Axios said a solo Israeli operation would be more limited because its air force does not have bombers that can carry the bunker buster bombs needed to hit Iran's Fordow underground uranium enrichment facility. IRAN IN BREACH, UN BODY SAYS The U.N. nuclear watchdog's board of governors on Thursday declared Iran in breach of its non-proliferation obligations, and Tehran announced counter-measures. A senior Iranian official said a "friendly country" had warned it of a potential Israeli attack. Security concerns have risen since Trump said on Wednesday that U.S. personnel were being moved out of the region because "it could be a dangerous place" and that Tehran would not be allowed to develop a nuclear weapon. Israeli Prime Minister Benjamin Netanyahu raised the possibility of strikes in a phone conversation with Trump on Monday, the Journal reported, citing two U.S. officials. "I don't want to say imminent, but it looks like it's something that could very well happen," Trump told reporters at a White House event earlier on Thursday, adding Iran could not be allowed to develop a nuclear weapon. "I'd love to avoid the conflict," he said. "Iran's going to have to negotiate a little bit tougher, meaning they're going to have to give us something they're not willing to give us right now." Security in the Middle East has already been destabilised by spillover effects of the Gaza war between Israel and Palestinian militant group Hamas. Trump has threatened to bomb Iran if the nuclear talks do not yield a deal and said he has become less confident Tehran will agree to stop enriching uranium. The Islamic Republic wants a lifting of U.S. sanctions imposed on it since 2018. Trump on Thursday also expressed frustration that oil prices had risen amid supply concerns arising from potential conflict in the Middle East. With Washington offering little explanation for its security concerns, some foreign diplomats suggested that the evacuation of personnel and U.S. officials anonymously raising the spectre of an Israeli attack could be a ploy to ratchet up pressure on Tehran for concessions at the negotiating table. A senior Iranian official told Reuters on Thursday the latest tensions were intended to "influence Tehran to change its position about its nuclear rights" during the Sunday talks. Iranian President Masoud Pezeshkian said that even if the country's nuclear facilities were destroyed by bombs they would be rebuilt, state media reported on Thursday. BREACH OF NON-PROLIFERATION OBLIGATIONS The International Atomic Energy Agency's Board of Governors declared Iran in breach of its non-proliferation obligations for the first time in almost 20 years, raising the prospect of reporting it to the U.N. Security Council. The step is the culmination of a series of stand-offs between the IAEA and Iran since Trump pulled the U.S. out of a nuclear deal between Tehran and major powers in 2018 during his first term, after which that accord unravelled. An IAEA official said Iran had responded to the 35-nation board's declaration by informing the U.N. watchdog that it plans to open a third uranium enrichment plant. Enrichment can be used to produce uranium for reactor fuel or, at higher levels of refinement, for atomic bombs. Iran says its nuclear energy programme is only for peaceful purposes. https://www.reuters.com/world/middle-east/un-nuclear-watchdog-says-iran-breach-obligations-iran-announces-counter-measures-2025-06-12/