(Fixes day reference in lead paragraph.)

(Reuters) – The U.S. is more vulnerable to inflationary shocks than in the past, Federal Reserve Bank of Richmond President Tom Barkin said in an interview with the Financial Times published on Thursday. 

Barkin said he expected inflation to continue dropping across the U.S, while cautioning that businesses were passing on costs to consumers more readily than in the past. 

“We’re somewhat more vulnerable to cost shocks on the inflation side, whether they be wage-[related] or otherwise, than we might have been five years ago,” Barkin told the FT. 

FRANKFURT (Reuters) – Germany’s economy is facing deep and profound challenges that could push up corporate insolvencies, keeping default risk elevated next year, the Bundesbank said in a Financial Stability Report on Thursday.

Germany’s economy has been skirting a recession for most of the past year as weak export demand, surging energy costs and rising wages are compressing corporate margins, pushing the country’s vast industrial sector deep into recession.

“The German economy is still facing profound structural challenges that are weighing on the medium-term growth outlook,” the Bundesbank said.

This will likely shake out the corporate sector, especially since aggregate earnings have declined in almost every quarter since the end of 2022, the central bank said.

“A significant number of corporate insolvencies are likely next year given ongoing structural change and the continued economic weakness,” the Bundesbank said. “Default risk for non-financial corporations is likely to remain elevated in 2025… given ongoing structural change and the continued economic weakness.”

Insolvencies may be exacerbated by higher interest rates since refinancing needs will increase costs and could contribute to more defaults.

But household finances should remain sound since the labour market is robust and nominal wages are still rising, giving ordinary consumers a healthy financial buffer, the bank added.

Residential real estate prices have also stabilised and while properties are still somewhat overvalued, models suggest that the probability of sudden price drops have declined.

The outlook for commercial real estate is not as rosy, however.

“Commercial real estate prices did not fall any further in the first half of 2024, but the risk of additional significant drops in prices has increased compared with last year,” the Bundesbank added.

KIGALI (Reuters) -Rwanda’s central bank held its key interest rate at 6.5% on Thursday after cutting it at the last two rate decisions this year.

Governor John Rwangombwa told reporters that the decision was based on uncertainties in the performance of the agriculture sector and that the central bank felt its policy stance could keep inflation within its 3%-8% target range.

“We think for now (the rate) is good enough to maintain inflation within our band,” he told a news conference.

Annual inflation has remained under 6% this year and stood at 3.8% in October.

The decision follows a 50-basis-point cut to the National Bank of Rwanda’s Central Bank Rate in August, and a similar-sized cut in May.

Investing.com — Wall Street is seen trading lower Friday, weighed by disappointment from Nvidia’s guidance. Starbucks is potentially looking at options for its China business, while the chairman of the Adani Group has been indicted over bribery claims. 

1. Nvidia’s revenue forecast disappoints 

Nvidia (NASDAQ:NVDA) stock retreated in premarket trading Thursday after the AI darling’s projection of its slowest revenue growth in seven quarters, particularly as investors had been used to the world’s most valuable company blowing past all estimates.

Nvidia’s fourth-quarter forecast indicated the company’s revenue growth will slow to roughly 69.5% from 94% in the third-quarter. 

This raised questions over whether the artificial intelligence boom is waning. 

But Nvidia was at pains to point out that there was no shortage of companies eager to create new AI systems using its chips, but supply chain constraints would lead to demand for its chips exceeding supply for several quarters in fiscal 2026.

“Expect stock to churn near-term as investors digest lack of ‘sizzle’ but we continue to like the stock on its ‘substance’,” said analysts at Bank of America Securities, in a note.

Nvidia is in the middle of launching its powerful Blackwell family of AI chips, which will weigh on the company’s gross margins initially but improve over time.

“The key dynamic here is the transition to Blackwell – where demand was described as ‘staggering’,” said analysts at Morgan Stanley (NYSE:MS). “Blackwell constraints are likely to be a major factor for at least a year, but we continue to see a strong Blackwell cycle as a driver.” 

2. Futures slip lower on Nvidia concerns

US stock futures edged lower Thursday, weighed by disappointing guidance from tech giant Nvidia. 

By 03:50 ET (08:50 GMT), the Dow futures contract was down 60 points, or 0.1%, S&P 500 futures dropped 17 points, or 0.3%, and Nasdaq 100 futures fell by 82 points, or 0.4%.

Nvidia, which recently overtook Apple (NASDAQ:AAPL) to become the world’s most valuable listed company, issued a revenue forecast which indicated a slower pace of revenue growth than seen in prior quarters. It also flagged supply constraints, especially in its upcoming Blackwell line of next-generation AI chips. 

This relative weakness, given the high expectations, from such a highly-weighted company could set the tone for the markets for the rest of the week.

There are jobless claims data later in the session for investors to digest, while several Federal Reserve officials are also set to speak in the coming days. 

3. Adani Group chairman indicted over bribery scheme

Shares in the listed companies in India’s Adani Group plunged Thursday after its billionaire chairman Gautam Adani was indicted in a New York federal court over his suspected role in a $265 million bribery scheme.

The 62-year-old billionaire and the seven other defendants have been accused of paying substantial bribes to Indian government officials to secure solar energy contracts that could generate more than $2 billion in profits.

This resulted in the shares in the conglomerate’s listed companies tumbling between 10% and 20%, with Adani Enterprises (NS:ADEL) – the flagship listed unit of the conglomerate – dropping 10%.

An Adani Group spokesperson said the allegations are “baseless and denied.”

These allegations herald a fresh round of regulatory trouble for Adani, and come nearly two years after a short seller report from Hindenburg Research had accused Adani of similar schemes. 

The report had sparked scrutiny from U.S. and Indian regulators against Adani, although India’s securities regulator claimed to have found little wrongdoing.

Shares of companies under the Adani Group lost more than a combined $100 billion after the Hindenburg report in early-2023, but they had since recouped most of their losses. 

4. Starbucks mulls China business options

Starbucks (NASDAQ:SBUX) is considering options for its China business, including a potential stake sale, as it attempts to revitalize sales under new CEO Brian Niccol, according to a report.

The coffee chain has been in talks with advisers over how to grow its Chinese business, including potentially introducing a local partner, Bloomberg reported. 

China is Starbucks’ second-largest market after the US, but the company has faced heightened competition in the country over the past few years from other foreign entrants, as well as local offerings.

In addition to its China woes, the company has seen waning sales in the U.S., and turned to Niccol, previously with Mexican restaurant chain Chipotle Mexican Grill (NYSE:CMG), as its CEO earlier this year. 

5. Crude rise on heightened Russia/Ukraine tensions

Crude prices rose Thursday, buoyed by fears of supply disruptions stemming from worsening tensions in the Russia-Ukraine war, countering the impact from a bigger-than-expected increase in US inventories.

By 03:50 ET, the US crude futures (WTI) climbed 1.3% to $69.64 a barrel, while the Brent contract rose 1.2% to $73.66 a barrel.

Crude prices have advanced this week as the use of long-range US and UK weapons by Ukraine against Russia, something Moscow had warned for months would be seen as a major escalation.  

Still, overall gains were limited by concerns over slowing demand, especially as U.S. inventories grew more than expected, rising by 545,000 barrels to 430.3 million barrels in the week ended Nov. 15.

More worrying for oil markets was a nearly 2.1 mb build in gasoline inventories, which spurred some concerns that US fuel demand was cooling as the winter season approached.

(Reuters) – Sri Lanka’s consumer price inflation reached minus 0.7% year-on-year in October after easing to minus 0.2% in September, official data showed on Thursday, as the island nation continued its economic rebound. The National Consumer Price Index captures broad retail price inflation and is released with a lag of 21 days every month.

By Uditha Jayasinghe

COLOMBO (Reuters) – Sri Lanka expects the IMF to announce a staff level agreement on its third review of the country’s bailout programme on Friday, President Anura Kumara Dissanayake told the first sitting of the new parliament.

Once IMF executive board approval is given, a further tranche of about $337 million in funds is expected to be released to Sri Lanka.

Dissanayake’s Marxist-leaning National People’s Power (NPP) coalition won a record 159 seats in the 225-member parliament in a general election last week.

A delegation from the International Monetary Fund is in Colombo for the third review of its $2.9 billion programme and will hold a press briefing on Saturday.

Dissanayake also outlined plans to complete a $12.5 billion debt restructuring with bondholders in December.

Sri Lanka will enter into individual agreements with bilateral creditors including Japan, China and India needed to complete a $10 billion debt restructuring, he added.

“Our economy is hanging by a thread. This economy cannot absorb any shocks. We have to think deeply and in detail about the policy decisions we take. The moment we obtained power our priority was to build confidence and reassure stakeholders,” he told lawmakers.

“We need to do much more to put the economy on a stable path.”

A nation of 22 million, Sri Lanka was crushed by a 2022 economic crisis triggered by a severe shortage of foreign currency that pushed it into a sovereign default and caused its economy to shrink by 7.3% in 2022 and 2.3% last year.

The president will have to present an interim budget in the next few weeks, as well as find ways to reduce taxes and increase welfare, which were his key election pledges, without derailing the IMF programme.

Sri Lanka is expected to grow 4.4% in 2024, according to World Bank data, for the first time in three years.

By Padraic Halpin and Amanda Ferguson

DUBLIN/BELFAST (Reuters) – Sinn Fein’s polling collapse from government-in-waiting to likely also-rans at an Irish election next week looks set to rob Irish nationalists of a potentially transformative moment in their pursuit of a united Ireland.

Earlier this year the party appeared on the brink of power in Dublin for the first time, placing it in government on both sides of the Irish border and ramping up preparations as it sought to force London to hold a referendum on a united Ireland within a decade.

But a fracturing of the party’s electoral coalition – in large part due to anger among traditional working class voters at its relatively liberal attitude to immigration – appears to have closed the path to power at the Nov. 29 election.

That could shelve – for the foreseeable future – Sinn Fein’s plans for an Irish government minister for reunification, unity planning by both a parliamentary committee and a citizens’ assembly and a “diplomatic offensive” to promote the goal at the United Nations and across the EU.

“An Irish government led by Sinn Fein would change the dynamics of this quite dramatically … Sinn Fein are an absolutely vital part,” said Colin Harvey, a human rights law professor at Queen’s University, Belfast, and board member of Ireland’s Future, a group that promotes debate around unity.

“But I think it’s essential to underline that this won’t be taken forward by any one political party. It needs to be a wide, broad and deep political and civic coalition.”

In campaigning in Dublin, there were precious few signs of such a coalition being built south of the border.

On a two-hour Sinn Fein canvass in one of its working class Dublin strongholds of Donaghmede – part of a constituency where it scored the highest vote of any party nationwide in the 2020 election – Reuters did not hear unity raised on one doorstep.

Instead unaffordable housing costs and under-resourced state services dominated discussions.

“It (Irish unity) has in the past been something me and my friends and people my age have spoken about, I don’t think with everything else going on right now it’s number one priority,” said 30-year-old teacher Deirdre Ní Chloscaí, walking by Dublin’s main thoroughfare of O’Connell Street.

LOW PRIORITY

While a commitment to Irish unity is a historical touchstone of Sinn Fein’s main rivals in the Republic, they have left the subject as little more than a footnote in their election manifestos.

Prime Minister Simon Harris’ Fine Gael devoted less than a page to Northern Ireland in its 124-page plan and favours a continuation of the outgoing coalition’s much more gradual path to unity – in part by investing some of Ireland’s huge budget surplus in Northern Ireland, where finances are more strained.

Harris’ main coalition partner, Fianna Fail, has gone a touch further, promising to engage with other parties on how potential proposals concerning unity could be developed and pledging to invest another 1 billion euros in cross-border projects.

An opinion poll on Sunday put Fine Gael and Fianna Fail on a combined 43%, suggesting they could again reach a majority with a third, smaller party. Both have ruled out governing with the left-wing Sinn Fein, who were on 18%.

That is a sharp change from a year ago when Sinn Fein was on course to be by far the largest party at 35%, and either bypass their centre-right rivals or leave little choice but for one of them to act as a junior partner.

UNDERLYING TRENDS

Sinn Fein insists that the only poll that matters is that on election day – and that irrespective of the result, broad trends are set to deliver a united Ireland.

“We have committed to putting the reunification question at the very heart of government,” Sinn Fein leader Mary Lou McDonald told Reuters. “But this is the direction of travel quite irrespective of who is in government.”

Despite the relative lack of interest, a large majority of voters south of the border support the ending of British rule in Northern Ireland in polls.

While polls show a comfortable majority in Northern Ireland favour remaining in the UK, the gap has narrowed slightly since Britain’s departure from the European Union put unity higher on the agenda in a region where a clear majority voted to remain in the EU with the Republic of Ireland.

Other trends have also steadily moved the dial in favour of unity, from Sinn Fein becoming the first nationalist party to lead the regional power-sharing government, to 2021 census data showing Catholics – who are more likely to support unity – outnumbered Protestants for the first time.

Under the terms of the 1998 Good Friday peace agreement, the British government is obliged call a referendum if it appears likely that a majority would back a united Ireland.

“The scale of change has been so profound, especially north of the border, that the truth is the question is now live,” McDonald said.

(Reuters) – Federal Reserve Bank of New York President John Williams sees inflation cooling and interest rates falling further, he told Barron’s in an interview published on Thursday.

Two percent is the inflation rate that can best balance the central bank’s employment and price stability goals, Williams told Barron’s.

LONDON (Reuters) -Britain borrowed more than expected in October, according to official data that showed the scale of the challenge facing finance minister Rachel Reeves who says she will fix the public finances as well as increase spending sharply.

In October alone, public sector net borrowing stood at 17.4 billion pounds ($22.0 billion), the Office for National Statistics said on Thursday.

That was higher than a median forecast of 12.3 billion pounds in a Reuters poll of economists.

It was the second-biggest October borrowing total since records began in 1993.

In the first seven months of the tax year, borrowing totalled 96.6 billion pounds, 1.1 billion pounds higher than in the same period a year earlier.

($1 = 0.7908 pounds)

By Naveen Thukral and Renee Hickman

SINGAPORE/CHICAGO (Reuters) – Wheat growers in several exporting countries are reluctant to sell their crops with prices near four-year lows, traders, farmers and millers say, leaving flour makers with dwindling supplies and vulnerable to any potential upswing in prices.

Typically grain processors buy wheat three to four months in advance. But millers in Asia, including Indonesia, the world’s No. 2 wheat importer, are currently covered for about two months, and in the Middle East, most grain processors only have up to 45 days of supplies, two millers and a trader said.

The limited supply held by flour makers reduces their buffer against any production shortfalls that would trigger a rally in world prices, with global reserves already projected to reach a nine-year low, and fuel food inflation.

Farmers are hoarding their crop as global wheat prices have slumped to their lowest since 2020 on solid output in Australia and Argentina and on improved growing conditions in major exporting regions including the U.S. and Black Sea region.

Wheat sales in Australia, the world’s fourth-biggest wheat exporter, are running at half the pace of last year at 500,000 tons contracted for November shipment.

At the same time, farmers in the U.S. and parts of the Black Sea region are storing grains gathered earlier this year in silos, hoping for higher prices, industry players said.

“Farmers are not happy with the current price being offered to them,” said a grains trader at an international trading firm in Singapore. “Farmer selling is very slow and it is not just Australia where the harvest is going on, it is the same situation in several exporting countries.”

FARMERS HOLD OUT

In the physical market, Black Sea wheat with 12.5% protein is being offered at $265 a metric ton, including cost and freight (C&F) to Asia, down from $275 a couple of weeks ago. New-crop Australian Premium White wheat is quoted near $280 a ton, C&F, down from $290.

“Prices have come off pretty dramatically. And personally, yeah, I am not selling any wheat at the current stage,” said Cordell Kress, a farmer from Rockland in the northwestern U.S. state of Idaho.

“If you are not needing money right away, it is kind of just, store it or hold on to it and hope for better prices or some other problem in Russia or Australia that will cause our prices to go up here domestically.”

Kress grows primarily soft white and hard red spring varieties of wheat.

In Australia, farmers are selling other crops instead. 

“You have very strong sales of chickpeas for cash flow, and now we are getting strong sales of canola into the current prices,” said Rod Baker at Australian Crop Forecasters in Perth.

TIGHT SUPPLY AHEAD

Along with lack of supply from farmers, high interest rates have deterred millers from stocking up on wheat, leaving them exposed if prices rise.

“Lower supply cover does leave us vulnerable, but with high interest rates it doesn’t make sense to hold large stocks,” said one Dubai-based purchase manager at a flour mill in the Middle East.

Even with robust southern hemisphere production, global wheat stockpiles are projected by the U.S. Department of Agriculture to shrink to a nine-year low by mid-next year.

“Wheat crops in the northern hemisphere still have to go through crucial development stages, any issues with the weather until harvest in July can trigger a rally in prices, given how tight the inventories are,” said Ole Houe, director of advisory services at IKON Commodities in Sydney.

In a slight reprieve for millers, attractive interest rates have prompted Russian farmers, who had been withholding their crops, to change tack and sell crops so they can deposit money in banks.

But top wheat exporter Russia might be running out of supplies. Moscow’s grain export quota, to be in place from February to June, could be nearly three times smaller than the 29 million tons a year earlier.