WASHINGTON (Reuters) – President-elect Donald Trump has tasked billionaire Elon Musk and former Republican presidential candidate Vivek Ramaswamy with finding deep cuts in the $6 trillion federal budget. Musk has said he aims to cut spending by 30%, while Ramaswamy has called for firing half of the federal workforce. 

The U.S. federal civilian workforce is the country’s largest employer. Here’s who these workers are:      

HOW MANY PEOPLE DOES THE GOVERNMENT EMPLOY? 

The U.S. government employs about 2.3 million civilian workers, according to the White House personnel office. 

That workforce has grown 7% since 2019 as Democratic President Joe Biden’s administration hired construction managers, engineers and other experts to oversee big projects authorized by the 2022 infrastructure package, according to the Partnership for Public Service.

The size of the workforce has remained steady at about 0.6% of the U.S. population since 2010, the nonprofit group says. That’s smaller than in decades past, when federal workers equaled 1% of the population in the 1960s and more than 2% in the 1940s.

WHO ARE THESE WORKERS? 

Federal workers tend to be older: 42.5% are over 50 years old, compared to 33.2% of U.S. workers overall, according to the Partnership for Public Service.

Federal workers likewise are more educated: 54% have a bachelor’s degree or higher, compared with 40% of U.S. workers overall.

About 30% of federal workers have served in the military, compared with 5% of the total U.S. workforce.

HOW MUCH DOES THEIR SALARY COST TAXPAYERS?

The government spent $271 billion on salary and benefits for those workers in the 2022 fiscal year, according to the Congressional Budget Office, equal to 4.3% of total spending that year.

CBO found that the government would spend about 10% on wages if it matched salaries paid in the private sector. Lower-skilled workers who lack a college degree tend to be paid more than their private sector counterparts, CBO found, while those with college or professional degrees were paid less.

WHO DO THESE WORKERS WORK FOR?

National security-related agencies account for roughly 70% of the civilian workforce. The largest employers were the Department of Veterans Affairs, with 487,000 workers, followed by the armed services, the Department of Homeland Security, and the Justice Department.

WHERE DO THEY LIVE? 

Federal workers are spread out across the country, with 80% located outside the Washington region. 

By Anthony Esposito

MEXICO CITY (Reuters) – The Bank of Mexico will likely be able to continue cutting its benchmark interest rate due to the progress made on bringing inflation down, bank governor Victoria Rodriguez told Reuters in an interview.

Banxico, as Mexico’s central bank is known, lowered its key rate by 25 basis points to 10.25% on Thursday in a unanimous decision by its five-member governing board.

“Given the progress of disinflation, we believe that we can continue with the cuts to the reference rate and in the following meetings we will be assessing the inflationary outlook and making the corresponding decisions,” said Rodriguez late on Monday.

In October, core inflation, which excludes volatile energy and food prices, slowed to 3.80% in the 12 months through October, down from 3.91% in September. Annual headline inflation rate ticked up to 4.76% last month, from 4.58% in September.

Banxico targets headline inflation at 3%, plus or minus one percentage point.

“Depending on what we see with the inflationary outlook, there could even be larger cuts,” said Rodriguez, referring to the fact that all four interest rate reductions this year, including at the last three straight meetings, have been 25 basis points each.

Meanwhile, Mexico’s peso currency has weakened sharply over the past six months, as a series of post-Mexican election reforms shook investor confidence in the country’s legal system, and as Donald Trump’s U.S. election victory fuels uncertainty over the future of the critical bilateral trade relationship.

Still, in the aftermath of the U.S. election, operating conditions in the forex market have remained “relatively orderly,” said Rodriguez, adding that while Banxico has not needed to take any action, it was monitoring the situation and ready to act if necessary.

“If operating conditions require it, we could, if necessary, intervene,” Rodriguez said.

On Friday, Mexico’s finance ministry presented the government’s highly-anticipated 2025 budget, forecasting the budget deficit next year will come down to 3.9% of gross domestic product as economic growth increases and the government plans hefty spending cuts including to defense and security.

Market watchers were keeping a close eye on the budget as the government is under pressure to narrow the deficit which is expected to close this year at 5.9% of GDP, the highest since the 1980s.

“After the budget was announced last Friday, the financial markets maintained an orderly behavior, which is undoubtedly a positive sign,” Rodriguez said.

By Nathan Layne, Tim Reid and Tom Rowe

WASHINGTON (Reuters) – Members of the over 2 million-strong U.S. civilian federal workforce are looking to an unlikely source to protect it from Donald Trump and Elon Musk’s promise to slash government employees and cut costs: the incoming Republican-controlled Congress. 

Federal employee unions are lining up lawyers and preparing public campaigns to try to stave off any mass firings, but they’re hoping Republican Congress members will join Democrats in defending their importance to local economies, health and safety, union members and government watchdogs tell Reuters. 

Trump has tasked Musk and former presidential candidate Vivek Ramaswamy to head a panel to streamline the U.S. government and is expected to revive a plan to convert some federal employees to “Schedule F” status which strips them of job protections.

Musk has said he could cut $2 trillion in spending, more than the annual discretionary budget; Ramaswamy recently proposed cutting 50% of the workforce by firing everyone whose Social Security number ends in an odd number.  

Because the U.S. Congress sets federal spending levels, Republicans may balk at any erosion of their power, unions say. 

Trump, Musk and Ramaswamy are “going to come up against congressional mandates and come up against the Constitution, and it’s going to set off this (debate) who has the right to spend money on behalf of the American people,” predicted Steve Lenkart, the executive director of the National Federation of Federal Employees, which represents over 100,000 federal employees. 

The U.S. government is the country’s largest employer. While workers are concentrated in Washington, D.C., and nearby Maryland and northern Virginia, some of the greatest concentrations of federal workers can be found in areas like southern Oklahoma and northern Alabama, which are represented by Republicans in the House.

The biggest federal employees’ union, the American Federation of Government Employees, which represents 750,000 federal workers, is also looking to Congress, said Jacqueline Simon, the AFGE’s policy director.

Trump may ask Congress to refuse to spend money on government agencies that it has already approved, a process known as impoundment, to drive out workers, Simon said. “That’s something that we’ll certainly be looking to Congress for them to uphold their own interests in maintaining their ability to determine appropriations,” Simon said.

“The American people reelected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver,” Karoline Leavitt, spokesperson for Trump’s transition team, said.

The Musk and Ramaswamy panel’s advisory role means its real power is still an unknown.

“It’s unclear what kind of authority it would have or what sort of legal oversight it would have,” said Michael Knowles (NYSE:KN), a U.S. Citizenship and Immigration Services (USCIS) employee who represents the agency’s workers at the American Federation of Government Employees union.

Many federal agencies, including USCIS, which has a massive backlog of asylum cases, actually have fewer employees than they need to run efficiently, he said. 

“I would certainly hope that all members of Congress, regardless of their political persuasion, would be, you know, protecting their prerogatives in our check and balance system to oversee the functioning of and the funding of government,” he said. 

REPUBLICAN CUTS

Republicans won some modest spending curbs in a 2023 showdown with U.S. President Joe Biden, but since then have shown little interest in scaling back the largest federal employers.

The Republican-controlled House of Representatives this year voted to increase spending at the Department of Veterans Affairs, which employs 487,000 civilian workers, more than any other single agency.

Government watchdogs say they are hoping Congress will stop Trump from “purging departments he disagrees with ideologically, regardless of what that means for government efficiency or serving in the public interest,” said Joe Spielberger, policy counsel at the Project on Government Oversight. 

“This is an issue where we can push Congress to fully exercise its oversight authority,” he said. 

A rule that Biden introduced in April to bolster protections for government employees could slow down any plans to slash employees.  

It is “not an executive order that can be changed willy nilly by the next president,” Democratic Senator Tim Kaine of Virginia said. But the rule and Congress’ ability to block some Trump layoffs taken together represent just “a guardrail, not a guarantee,” Kaine said. 

“We are going to need not only Democrats but some Republicans battling against efforts to turn the federal civil service into a political loyalty spoils operation,” said Kaine. 

Trump may have the backing of some courts, however. Last year, two judges on the U.S. Fifth Circuit Court of Appeals wrote that a president should have broad powers to fire government workers.

Whether there are Republicans in Congress willing to oppose Trump on the issue remains to be seen. 

“Where you have the three arms of government that are all on the same page, there’s not as many checks and balances, obviously,” said Lilas Soukup, president of an AFGE local that represents workers from the Centers for Disease Control and Prevention and the Department of Energy. 

By Kitiphong Thaichareon and Orathai Sriring

BANGKOK (Reuters) – The second phase of Thailand’s “digital wallet” handout scheme will be launched in January and distribute 40 billion baht ($1.16 billion) among 4 million people to help boost consumption, officials said on Tuesday.

The government’s flagship $14 billion stimulus programme to give 10,000 baht ($289) each to about 45 million people was launched in late September, with about a third of the payments already made.

The government had faced delays in the rollout, hampering efforts to jumpstart an economy that expanded just 1.9% last year.

The second tranche of payments will target people over 60 who need support first, Finance Minister Pichai Chunhavajira said.

“We think this group is in need… and we can do it immediately,” he told reporters.

Cash will be transferred by late January, before the Lunar New Year, Deputy Finance Minister Julapun Amornvivat said.

Officials were speaking after a government meeting on Tuesday about stimulus plans and debt relief measures.

Pichai said those would apply to borrowers with debts that were up to a year overdue, worth about 1.2 trillion to 1.3 trillion baht.

The measures will include a suspension of interest and reduced principal payments for three years, he said.

The government is also planning housing support for low-income earners, Pichai said.

Earlier on Tuesday, Prime Minister Paetongtarn Shinawatra said the economy was showing good signs for expansion, with growth of 3% annually in the third quarter and 2.6% projected for the full year.

The economy has potential to grow more than forecast as private investment can be accelerated and support measures will be considered, she said.

Southeast Asia’s second-largest economy’s 3% annual growth in the September quarter was the fastest pace in two years and beat analysts’ expectations.

However, officials and analysts saw increased challenges to maintaining the momentum next year.

Deputy Finance Minister Paopoom Rojanasakul on Tuesday said the third-quarter GDP data showed very good growth.

“We have a duty to maintain the momentum of growth into the fourth quarter,” he said.

Growth is expected to accelerate to 4.3% annually in the final quarter of 2024, helped by government stimulus measures, he said, and should be higher in 2025.

By Valentina Za

MILAN (Reuters) -The European Central Bank should return to a more forward-looking approach in setting monetary policy and provide more guidance on future moves now that post-pandemic shocks are abating and inflation normalising, a top policymaker said.

ECB Governing Council member and Bank of Italy Governor Fabio Panetta said on Tuesday the euro zone economy was returning into “charted territory” after the “exceptional shocks of 2022-2023” and inflation forecasting errors were normalising.

The ECB now needs to “focus on the sluggishness of the real economy” and move official interest rates into “neutral, or even expansionary, territory,” Panetta said in the text of a speech at Milan’s Bocconi university.

“With inflation close to target and domestic demand stagnant, restrictive monetary conditions are no longer necessary,” he said, adding inflation could fall well below target in the absence of a sustained recovery.

“A scenario that would be difficult for monetary policy to counteract and should therefore be avoided,” he said.

The ECB has cut interest rates three times since June after seeing inflation, which had hit double digits in the wake of Russia’s invasion of Ukraine in 2022, drop to its 2% target.

Its most recent cut, in October, saw it reduce the rate it pays on bank deposits by a quarter of a percentage point to 3.25%.

“We are probably still a long way from the neutral rate,” Panetta said.

Economists define the neutral rate as one that neither restricts nor spurs economic growth and see this in the euro area at between 2% and 2.5%, although estimates are as high as 3% and as low as 1.75%.

Investors expect the bank to lower borrowing costs by another quarter of a point at its next meeting on Dec. 12, followed by more cuts through the spring.

This would leave the ECB’s deposit rate at 1.75% to 2.0%.

Having managed to steer the euro zone’s economy through uncharted waters, the ECB should change its “meeting by meeting” approach to monetary policy dictated by the exceptional circumstances of the past two years, which forced it to give less weight to forecasts, Panetta said.

“We can now return to a more traditional, genuinely forward-looking approach to monetary policy, in line with our medium-term orientation.”

Panetta also urged the ECB “to provide more guidance on the expected evolution of our policy than has been the case in the recent past.

“This will help firms and households to form their views on the future path of policy rates, thereby supporting demand and the recovery of the real economy”.

Wrong-footed by a surge in inflation in 2021-22, the ECB has ditched its habit of providing official guidance about the future path for monetary policy.

Instead, it has insisted it would make decisions ‘meeting by meeting’ based on incoming data – albeit not without the occasional hint about what to expect.

Panetta said this meeting by meeting, data driven policy did not fit well with the more forward-looking approach that he called for.

(editing by Gavin Jones)

LONDON (Reuters) – The Bank of England’s most recently appointed interest rate-setter Alan Taylor said the central bank’s gradual approach to cutting borrowing costs was in line with recent market pricing for about four quarter-point cuts by the end of 2025.

“I think if you ask what does gradual mean right now, it’s aligned in our case closely to the market curve, so that would be in line with about 100 basis points over the next year,” Taylor told the Treasury Committee in parliament on Tuesday.

“But that doesn’t mean to say that’s what will unfold, if conditions are weaker, and in my own view (if the balance is) skewed to the downside risk now versus the upside risk of about a year ago, then we could go faster.”

He said the outcome could prove different, depending on economic conditions.

Markets were pricing about four rate cuts by the BoE by the end of 2025 before the government announced its big-spending budget on Oct. 30, but those bets have dwindled to between two or three since the budget and the election of Donald Trump as the next U.S. president.

By John Revill

BERN (Reuters) – Switzerland has raised concerns about plans by incoming U.S. President Donald Trump to hike tariffs and is considering how to respond should his new administration raise trade barriers, the government said on Tuesday.

Trump aims to kick the aggressive trade agenda from his first term into higher gear with across-the-board 10% tariffs on imported goods and even higher levies on imports from China.

The move could hurt the export-orientated Swiss economy, which has the United States as it biggest market, experts say.

“Switzerland is concerned about Donald Trump’s announcement to impose additional tariffs on all goods imported in to the U.S.” a spokesman for the State Secretariat for Economic Affairs (SECO) said.

“Switzerland clearly rejects the (Trump administration’s) plans,” the spokesman added.

The proposals contravene the rules-based international trading system which was crucial to the Swiss economy, the spokesman added.

Currently around a fifth of Swiss goods exports go to the United States, according to customs data, making the country a more important market than Germany, China or France.

SECO said Bern was examining “sensible responses” in the interests of the Swiss economy and seeking discussions with the relevant U.S. authorities, as well as counterparts in Germany, France, and Italy and the European Union on how to respond.

SECO did not give details on what responses were being considered, although Switzerland’s leeway could be restricted after it scrapped all industrial tariffs this year.

Currently the U.S. has low single-digit tariffs on the import of industrial goods, with many Swiss industrial exports to the U.S. duty-free.

Investing.com — Wall Street is seen slipping slightly at the open Tuesday ahead of key earnings from retail giant Walmart. Goldman Sachs looks for future equity gains, while Trump Media is seeking to diversify with the purchase of Bakkt. 

1. Walmart expected to shine once more 

The highlight of Tuesday’s corporate earnings slate arrives before the opening bell rings in the form of Walmart (NYSE:WMT), with the retail giant expected to deliver another solid quarter with its low prices for essential products helping in the face of soft demand from budget-conscious consumers.

Walmart is expected to post a roughly 4% rise in revenue and 5% growth in adjusted operating income, according to estimates compiled by LSEG.

The retailer has also started to benefit from investments in its e-commerce and advertising businesses that have helped the company grow its operating income at a faster clip than its revenue.

“We expect another solid all-around delivery and guidance raise driven by strong top-line momentum across the enterprise and ramping alternative revenue streams,” said analysts at Oppenheimer, in a note.

Additionally, “we expect a positive tone from mgmt about holiday (following a good back-to-school season), as well as continued confidence in their positioning in the market and their ability to take share,” said analysts at Citi, in a note.

Walmart’s stock has gained 60% so far this year, ahead of the 23% gains from the benchmark S&P 500 and rival Target (NYSE:TGT)’s near 10% increase. 

2. Futures fall; Walmart in spotlight

US stock futures slipped lower Tuesday, with investors awaiting the release of more corporate earnings from some significant companies.

By 03:40 ET (08:40 GMT), the Dow futures contract was down 65 points, or 0.2%, S&P 500 futures dropped 9 points, or 0.2%, and Nasdaq 100 futures fell by 50 points, or 0.2%.

Nvidia’s earnings will be the highlight of the corporate results this week, with the AI darling likely to set the tone for equity markets at least for the final half of the week, and possibly into year-end, when it reports on Wednesday.

Ahead of this, numbers from Walmart [see above] will be in the spotlight.

About 93% of S&P 500 companies have reported quarterly results so far, with three-quarters exceeding expectations and more than 60% beating revenue estimates, according to data from FactSet.

The US economic data slate only has housing figures on tap Tuesday, while Kansas City Fed President Jeffrey Schmid is set to speak later in the day.

3. Goldman sees 10% S&P 500 upside in 2025

The main US stock indices have slipped back from all-time highs over the last week or so, but analysts at the influential investment bank Goldman Sachs have forecast more strong gains into 2025.

The broad-based S&P 500 has dropped back 1.5% over the course of the last week, closing on Monday at 5,893.62. 

However, Goldman has forecast the S&P 500 index would reach 6,500 by the end of 2025, on the back of continued growth in the US economy and corporate earnings, offering just over 10% upside.

The so-called ‘Magnificent 7’ stocks – Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA) – collectively will outperform the rest of the companies in the benchmark index next year, Goldman said, but only by around 7 percentage points, the slimmest margin in seven years.

“Although the ‘micro’ earnings story supports continued outperformance of the Magnificent 7 stocks, the balance of risk from more “macro” factors such as growth and trade policy lean in favor of the S&P 493 (companies),” the bank said, in a note dated Nov. 18.

Goldman estimated corporate earnings to grow 11% and a real U.S. gross domestic product growth of 2.5% in 2025.

The brokerage also warned that risks remain high for the broader U.S. equity market heading into 2025, due to a potential threat from tariffs and higher bond yields.

“At the other end of the distribution, a friendlier mix of fiscal policy or a more dovish Fed present upside risks,” Goldman added.

4. Trump Media looks to diversify with Bakkt purchase

Trump Media & Technology Group (NASDAQ:DJT) stock slipped back a touch in premarket trading Tuesday, after posting gains of over 16% the previous session following a report that Donald Trump’s social media company is in advanced discussions to buy digital asset marketplace Bakkt (NYSE:BKKT) in an all-stock deal.

The Financial Times reported that Trump Media & Technology Group is keen on Bakkt, as it looks to diversify its offerings beyond social media, having recently launched crypto venture, World Liberty Financial.

President-elect Trump had positioned himself as pro-cryptocurrency on the campaign trail, promising to make America the “world capital for crypto and Bitcoin.”

Bakkt — which was created by Intercontinental Exchange (NYSE:ICE), the owner of the New York Stock Exchange — skyrocketed more than 162% on Monday, amid repeated trading halts due to volatility.

5. Future crude supply in spotlight

Crude prices slipped slightly Tuesday, handing back some of the previous session’s sharp gains as traders digested the potential for significant supply outages.

By 03:40 ET, the U.S. crude futures (WTI) slipped 0.6% to $68.78 a barrel, while the Brent contract fell 0.5% to $72.92 a barrel.

Oil prices surged over 3% on Monday after Equinor said it had halted production at its Johan Sverdrup oilfield in Norway, the biggest oilfield in Western Europe.

The outage presents some uncertainty over oil supplies in the region, and added to the concerns created by the Biden administration’s decision to allow Ukraine to use US-made weapons to strike deep into Russia.

There has been little impact on Russian oil exports from the war so far, but if Ukraine were to target more oil infrastructure that could see oil markets add more of a geopolitical bid.

That said, the International Energy Agency’s recent monthly publication forecast that global oil supply will easily exceed demand in 2025, with the agency citing increased production outside the Organization of Petroleum Exporting Countries and allies. 

Production in the U.S. remained close to record highs above 13 million barrels per day, and the proposed appointment of Chris Wright, the CEO of Liberty Energy, as the next Secretary of Energy by President-elect Donald Trump has been seen as a strong signal of a focus on ramping up domestic fossil fuel production. 

By Nell Mackenzie

LONDON (Reuters) – More UK fund managers say they’ve paid higher costs in 2024 to protect their investment portfolios against fluctuations in currency markets, according to survey results by software provider, MillTechFX.

This year, 88% of UK fund managers said they decided to hedge their investments against currency risk, up from 75% last year, because of increased volatility, according to a survey of 250 UK asset managers.

Most said they had put on forex hedges because of options market pricing.

Forex options are often used to hedge against, or speculate on, future scenarios in currency markets. The probability of higher or lower volatility is factored into the cost of an option – like an insurance premium.

The costs of hedging have risen, 84% of the fund managers said, up from 75% last year, the survey showed.

The pound hit a year-low on April 22 of $1.2296 and then a 2-1/2-year high of $1.3384 on Sept. 24.

The survey showed 89% of all respondents said the strong pound affected their fund’s returns.

Sterling strength helped UK fund managers better afford investments priced in dollars, it said.

Only about 6% of fund managers said they hedge between 75-100% of their investment portfolio against currency risk.

The largest proportion of fund managers said they hedge between half and three quarters of their holdings.

The largest amount of respondents said they put on currency hedges lasting between four and six months.

UK hedge fund managers hedge more than their U.S. counterparts by 9%, the survey showed.

Investing.com — The Federal Reserve will likely implement a 25 basis point (bp) rate cut in December, but the decision remains a “close call,” Deutsche Bank (ETR:DBKGn) strategists said, citing recent comments by Federal Reserve officials.

While the Fed may lean toward cutting rates, the data-dependent nature of the central bank’s approach keeps the possibility of a pause firmly in play.

Federal Reserve Bank of Boston President Susan Collins recently remarked that a rate cut in December is “certainly on the table” but “not a done deal,” emphasizing the need for more economic data before making a definitive move.

Other Fed officials have also shared cautious comments, pointing to the risk of inflation surprises or labor market adjustments.

Core inflation has moderated but remains above target levels, with October’s core PCE index showing a 2.8% year-on-year increase.

Fed Chair Jerome Powell recently said the bank “will go slower if data permits,” while stressing the need for “more certainty to alter policy.”

“Most officials’ comments leaned at least slightly hawkish, suggesting that December meeting is a close call between cutting and skipping,” Deutsche Bank said in a note.

Powell said that financial conditions have eased, and the labor market, while cooling, remains resilient. However, uncertainties tied to fiscal policies and inflation trends complicate the outlook.

Deutsche strategists anticipate that the Fed may aim to maintain rates above 4% well into 2025, reflecting a potentially higher neutral rate in the range of 3.75%-4%.

Austan D. Goolsbee, president of the Fed Bank of Chicago, believes rates will be “a lot lower” over the following 12 to 18 months, “as long as inflation is moving towards 2%.”