UK's Reeves Takes Tax Burden To Post-war High To Bolster Finances

Economic

Summary:

Reeves raises taxes to stay on track for borrowing target.Tax burden hits fresh high.Budget watchdog says Reeves has more margin to meet plan.Growth outlook lowered on weaker productivity view.UK government's borrowing costs fall in bond market.

LONDON, Nov 26 (Reuters) - British finance minister Rachel Reeves announced a big tax-raising budget on Wednesday that will take more money from workers, people saving for a pension and from investors to give herself greater room to meet her deficit-reduction targets.

Britain's fiscal watchdog cut its forecasts for economic growth for the coming years - a setback for struggling Prime Minister Keir Starmer who promised voters last year he would speed up the economy - and said spending was due to rise.

But in a figure closely watched by investors assessing Britain's borrowing risks, the Office for Budget Responsibility (OBR) said the government will now have more than double its previous buffer for meeting its fiscal targets.

The OBR - in forecasts published in error before Reeves began her annual tax and spending speech to parliament, and first reported by Reuters - said the tax hikes would amount to an annual 26.1 billion pounds ($34.5 billion).

That will push Britain's tax-to-GDP ratio to 38.3% of economic output, a fresh post-war high, although this will still be lower than the euro zone's average of 41% last year.

In her first budget last year, Reeves ordered 40 billion pounds of tax hikes - the biggest since the 1990s - and she promised at the time that they would be a one-off.

"No doubt, we will face opposition again. But I have yet to see a credible, or a fairer alternative plan for working people," Reeves said to cheers from Labour Party lawmakers, many of whom are likely to welcome her higher welfare spending.

GROWTH FORECASTS CUT

The main spending measure was the removal of a two-child limit on welfare payments to poor families - a move popular with Labour lawmakers but lacking support among Britons as a whole.

Although Britain's next national election is not due until 2029, the authority of Reeves and Starmer has been questioned within their centre-left party.

The Institute for Fiscal Studies, a think tank, highlighted how the government planned to increase spending in the short term while much of the push to raise taxes would hit later on.

"The additional spending and borrowing in the short-term is readily believable. The future restraint, just before the next election? One could be forgiven for treating that with a healthy dose of scepticism," IFS director Helen Miller said.

The OBR cut its forecasts for growth in the UK economy which it now saw averaging 1.5% over the five-year forecast period, 0.3 percentage points slower than it expected in March.

The downgrade was linked to lower productivity growth which the OBR said reflected a long period of past underperformance due to headwinds including Brexit.

Reeves vowed to do better than the watchdog expected. "We beat the forecasts this year and we will beat them again," she told parliament.

BORROWING COSTS FALL

British 30-year government bond yields - which are sensitive to concerns about higher borrowing - were sharply lower at 1515 GMT, down 7 basis points on the day, suggesting investors were largely comfortable with the budget plan.

Sterling rose against the U.S. dollar and the euro.

The OBR said the headroom - the amount of extra spending or tax cuts possible for the government while staying within its budget rules - now stood at almost 21.7 billion pounds in four years' time.

In March, the OBR had forecast headroom of 9.9 billion pounds, a historically low level which was eaten up by a downgrade of the country's economic outlook, higher-than-expected borrowing costs and a U-turn in July on welfare reform.

Ian Stewart, chief economist at Deloitte, said the OBR's assumption of faster wage growth had come to the rescue of Reeves as it would boost tax receipts.

"However, today's announcements will likely have a longer-term impact on growth, as the chancellor is raising an extra 26 billion pounds a year in tax," Stewart said.

The OBR said a three-year extension of the freeze on income tax thresholds - which was first introduced by the previous Conservative government - would raise an extra 8.0 billion pounds in the 2029/30 financial year.

Reeves said in her first budget last year that she was returning stability to the public finances after the shocks delivered by Brexit, the coronavirus pandemic and the "mini-budget" crisis of former Conservative Prime Minister Liz Truss.

This year, the generosity of pension incentives was scaled back with social security charges on salary-sacrifice pension contributions raising almost 5 billion pounds.

Increasing tax rates on dividends, property and savings income would raise 2.1 billion pounds, the OBR said, while an annual tax on homes worth more than 2 million pounds was expected to raise 0.4 billion in 2029/30.

"Today's autumn budget marked the third-largest tax-raising budget since 2010," Sanjay Raja, chief UK economist, at Deutsche Bank said. "Put simply, while this year's budget paled in comparison to the chancellor's spending announcements from 2024, tax raising measures were indeed historic."

Reeves maintained a freeze on the rate of fuel duty dating back to 2011 but she introduced a new mileage-based charge on electric cars.

SPENDING UP, GROWTH DOWN

Public spending was due to grow every year as a result of the measures in the budget - reaching an extra 11 billion pounds in 2029/30 - primarily to pay for the welfare measures.

A think tank that focuses on poverty reduction welcomed the removal of the two-child cap, along with actions to lower energy bills and an increase in the minimum wage.

"But there is more to do," Alfie Stirling, insight and policy director at the Joseph Rowntree Foundation said. "Housing costs and bills are still too high, our safety nets are too frail, and the cost to workers of caring for their loved ones is too great."

Source: Reuters

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Daniel Carter

Political

● Trump administration ends Temporary Protected Status for 353,000 Haitians despite Haiti's violence.

● Biden had extended TPS, citing Haiti's crises.

● Noem says allowing Haitians to remain is 'contrary to the US national interest.

The Trump administration is again seeking to end humanitarian protection for Haitians in the U.S., saying their legal status will end on February 3, a government notice published on Wednesday said, a move that comes despite spiraling violence in Haiti that has displaced more than 1 million people.

The notice announcing the end of Temporary Protected Status for some 353,000 Haitians said Homeland Security Secretary Kristi Noem had determined there were "no extraordinary and temporary conditions" in the country that would prevent migrants from returning.

U.S. President Donald Trump's administration has moved to end most enrollment in the TPS program as part of a broader clampdown on legal and illegal immigration. As a presidential candidate in 2024, Trump took particular aim at Haitian migrants in the U.S., alleging without evidence that they were eating pets in Springfield, Ohio.

JUDGE BLOCKED EARLIER MOVE TO END PROTECTION

Former President Joe Biden's administration extended TPS for Haitians in 2024, citing "simultaneous economic, security, political, and health crises" in Haiti, fueled by gangs and a lack of a functioning government. The extension gave them protections through February 3, 2026.

Shortly after Trump took office, Noem moved to end Haiti TPS ahead of its scheduled expiration, but a federal judge blocked that in July, saying Haitians' interests in being able to live and work in the U.S. "far outweigh" potential harm to the U.S. government.

More than 1.4 million Haitians have been displaced by violence and instability, according to the International Organization for Migration.

UNICEF estimated in October that over 6 million people - more than half the population, including 3.3 million children - need humanitarian assistance.

The U.S. Department of Homeland Security notice announcing the end of Haiti TPS states that "certain conditions in Haiti remain concerning," including large-scale displacement, but that "permitting Haitian nationals to remain temporarily in the United States is contrary to the U.S. national interest."

Source: Reuters

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Devin

Commodity

The light sweet crude oil market did drift a little bit lower during the early hours on Wednesday, as we continue to see a bit of negativity. Whether or not we break down remains to be seen, but really, at this point in time, one thing you need to keep in the back of your mind is that Thursday is Thanksgiving.

Fading Rallies in a WTI Oversupplied Market

That will obviously have a major influence on what happens next, as the Thanksgiving hours are shortened for the futures market, and obviously, that will have an influence on CFD markets if you're involved there. Short-term rallies at this point in time should end up being selling opportunities, and I'm watching the 50-day EMA, which is just above the $60 level and a downtrend line. Any rally at this point in time shows signs of exhaustion, and at that point, I'm willing to start going short again.

The $55 level is a potential floor in the market, and I think it will take a lot of work to get below there.

Brent Oil Technical Analysis

Brent markets gap lower, and basically just sat there after the open, and now it looks like we are trying to determine whether or not we are going to start dropping toward the floor. The floor at this point in time is the $60 level, which has been a major support level going back to early April.

If we rally at this point in time, I'd be watching the 50-day EMA and the downtrend line that is here as well. And again, I think this is a situation where you are fading short-term rallies. Remember, OPEC, Russia, and the United States are all throwing a ton of oil into the market. So that has a major influence on the oversupply of crude oil and what could potentially be a somewhat slow economy right now in various parts of the world. That will put a drag on demand.

Source: FX Empire

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Justin

Political

Economic

Malaysia's plan to bar those under 16 from opening social media accounts beginning next year has some parents and child rights activists supporting the tighter regulations, while critics warn of broader surveillance and a deepening digital divide.

Communications Minister Fahmi Fadzil said on Sunday that the cabinet has decided that children younger than 16 will not be allowed to open social media accounts. He said platforms are expected to implement age verification by next year using official documents such as passports or national identity cards, and that Malaysia is studying mechanisms used in other countries, including Australia, which is due to implement a similar ban next month.

"We hope that by next year, social media platforms will comply with the government's decision to prohibit children under the age of 16 from opening social media accounts," Fahmi said, without specifying the platforms. He added that if authorities, platforms and parents each play their part, the Malaysian internet can be kept safe for children and families.

The move comes as Malaysian schools face heightened scrutiny following a series of violent incidents. In October, a 16-year-old girl in the city of Petaling Jaya, in the state of Selangor, was stabbed to death in a school toilet by a 14-year-old boy. The case raised questions about the boy's mental health, exposure to violent content and the breakdown of peer networks.

"To ensure a safer environment (for children), we need stronger protections," Padma Zachariah, a mother of a 15-year-old boy, told Nikkei Asia. "That means real age verification, safer algorithms for minors and limited features for young users," she said, adding that the country needs more digital literacy education in schools. "My son's school already includes it, and I think it's crucial to have regular check-ins, maybe monthly, to keep kids informed and safe."

Noor Azimah, founder of Parent Action Group for Education Malaysia, supported the move, saying it is a "reasonable and even necessary response" to the rising tide of online harms. "But a ban on its own will not solve the problem," she added. "The policy will fail if a ban becomes merely symbolic, if enforcement is weak."

Hartini Zainuddin, a child rights activist and founder of Chow Kit Foundation, also supports the new rule. "Regulation is necessary, and protection is necessary," she said. "But it must be smart, evidence-based and child-centered, not just reactive bans that look good in headlines but don't keep children truly safe."

She suggested that the government set up "specialized child-focused cyber units, properly resourced teams within law enforcement who can respond quickly to cases involving children, in partnership with NGOs and tech companies."

"We hope social media platforms will comply with the government's decision," Communications Minister Fahmi Fadzil says. © Reuters

Critics offered different views.

Zaharom Nain, a professor at Nottingham University Malaysia and a board member of the newly established Malaysian Media Council, said the proposal treats Malaysian teenagers as if they experience the same social, cultural and digital environments.

He added that such bans often indicate a reluctance to invest in longer-term solutions such as digital literacy, mental health support and platform accountability. "Once powers expand," he said, "rolling them back becomes far more difficult, particularly in an environment where surveillance has already crept into many parts of public life."

Some rights groups argue that the government's approach risks creating deeper vulnerabilities. Mandatory identity checks would require platforms to collect sensitive identification documents from millions of Malaysians, a move critics say risks normalizing the loss of anonymity while Malaysia's privacy laws remain outdated.

"My main concern is the mechanism proposed to enforce it," said Abang Mohamad Iwawan, a lawyer and co-deputy chairperson of the Malaysian Bar's Human Rights Committee. He added that requiring identity verification for social media access opens the door to "broader surveillance and censorship."

"Protecting children online is important," Iwawan said, "but it cannot come at the cost of undermining fundamental freedoms or creating a digital environment where people fear monitoring for what they see, read or say." He reiterated that policies must be "necessary, proportionate and [employ] the least restrictive means" rather than rely on sweeping digital surveillance.

Wathshlah Naidu, director of the Centre for Independent Journalism Malaysia, told Nikkei the ban could accelerate the divide in which digitally literate youths bypass restrictions while others, especially from lower-income households, lose access to learning resources, peer networks and diverse sources of information.

"It is not enforceable holistically," she said. "Kids will use VPNs (virtual private networks) or alternative accounts. Meanwhile, others lose access to essential digital spaces."

Wathshlah added that harms such as grooming, exploitation and bullying stem from platform design, algorithmic amplification and weak content moderation.

"These issues existed long before social media," she said. "Without addressing root causes, the ban will not fix the problem."

Source: Asia_Nikkei

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Adam

Economic

Investors are betting big that the Federal Reserve will cut interest rates again when policymakers meet next month, erasing doubts that had tipped the odds against a move as recently as last week and setting the stage for gains in US bonds.

The amount of new positions held by traders in futures contracts tied to the central bank’s benchmark has surged in the past three trading sessions, with back-to-back record daily volumes seen in the January contract last week. Market pricing now signals roughly 80% certainty of a quarter-point move at the Fed’s December meeting, compared with 30% odds just days ago.

Traders Crowd Into Fed Futures Targeting a December Rate Cut_1

The shift in rate sentiment started after last week’s delayed September jobs data, which painted a mixed picture. It then picked up steam on Friday after New York Fed President John Williams signaled he sees room for a reduction “in the near term” amid labor market softness.

“The Fed is very divided,” but it looks like “doves have outnumbered hawks,” said Tracy Chen, a portfolio manager at Brandywine Global Investment Management.

This week, San Francisco Fed President Mary Daly backed lowering rates at the next meeting, while Governor Stephen Miran on Tuesday reiterated his case for large interest-rate cuts even as inflation remains stubbornly above the central bank’s preferred level.

Fed Chair Jerome Powell and his allies on the policy-setting committee are “on board with a cut,” despite pushback from other officials who are more concerned about inflation, said Subadra Rajappa, a strategist at Societe Generale. With recent soft economic data, including the labor market, “Powell will be able to convince the rest of the committee.”

The dovish tone in futures is echoed in the cash Treasuries market, where this week’s client survey from JPMorgan showed net long positions rising to the most in about 15 years.

On Tuesday, the 10-year US yield fell below 4% for the first time in a month, after White House National Economic Council Director Kevin Hassett emerged as the front-runner to serve as the next Fed chair, boosting expectations for lower rates over the next year. The yield was little changed at 4% on Wednesday.

‘On Board’

It’s normal for Fed officials to guide Wall Street toward their ultimate decision ahead of the meetings to avoid surprises. Only three times in more than two years — covering a total of 20 Fed meetings — have traders not fully priced in an outcome this close to a policy decision.

The combined amount of new positions added in January fed funds futures has been close to 275,000 contracts since Thursday. That’s equivalent to approximately $11.5 million per basis point of risk, or 37% of the total open interest in the tenor as of Tuesday’s close. The contract rallied from as low as 96.18 Thursday to as high as 96.35 Monday, signaling new long positions added.

“The market largely viewed the comments from Williams as Powell playing his hand, so to speak,” said Blake Gwinn, the head of US interest rate strategy at RBC Capital Markets. “Data this week has leaned that way too.”

While most Wall Street strategists are now calling for a December reduction, not all are as convinced as traders that it will happen. Those at Morgan Stanley last week scrapped their prediction for the central bank to ease, while JPMorgan Chase & Co. also leans toward the Fed holding next month, “though December should remain a very close call.”

“We continue to think they will cut in December, but I think after that the outlook is a little bit more uncertain,” said Tiffany Wilding, economist at Pacific Investment Management Co., on Bloomberg Television. “Overall the economy has held up remarkably well from a growth perspective this year, but nevertheless there are down side risks to the labor market and inflation appears to be kind of around 3%, clearly above the target.”

Here’s a rundown of the latest positioning indicators across the rates market:

JPMorgan Survey

For the week ended Nov. 24, investors’ outright long positions rose 4 percentage points, to the most since April, pushing the net long positioning to the most since October 2010. Shorts dropped 1 percentage point on the week.

Traders Crowd Into Fed Futures Targeting a December Rate Cut_2

New Risk in SOFR Options

In SOFR options out to the Jun26 tenor there has been a surge in open interest in the 96.25 strike, largely due to a big jump in positioning via Dec25 calls over the past week. The strike has been used across multiple structures targeting hedging around a 25bp rate cut at the December FOMC meeting, including SFRZ5 96.125/96.25 call spreads and SFRZ5 96.25/96.3125 call spreads. There has also been continued demand for SFRZ5 96.1875/96.25/96.3125/96.375 call condors. The SFRZ5 96.1875/96.25 call spreads have also been popular plays over the past week.

Traders Crowd Into Fed Futures Targeting a December Rate Cut_3

In SOFR options across tenors out to the Jun26 contracts, the 96.25 strike remains the most populated due to continued demand for upside call structures involving the level in Dec25 options. There also remains a large amount of open interest in the Dec25 96.50 and Dec25 96.375 calls. For large outstanding put structures, the Dec25 96.25 and Dec25 96.1875 put strikes are significantly populated.

Traders Crowd Into Fed Futures Targeting a December Rate Cut_4

Treasury Options Premium

The premium paid on options to hedge Treasuries over the past week has been steady around neutral level across the futures strip. Premium in the front and intermediates of the futures strip continues to slightly favor calls over puts, indicating traders paying more to hedge a Treasuries rally in the front end and belly of the curve versus a selloff. The December Treasury options expired Nov. 21.

Traders Crowd Into Fed Futures Targeting a December Rate Cut_5

Source: Bloomberg

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Adam

Stocks

Key Takeaways

Nvidia rival Broadcom, which counts Google as a major customer, has seen its stock surge recently along with Alphabet's.

With its recent gains, the custom AI chipmaker's stock is one of the top performers in the S&P 500 this year, outpacing Nvidia's rise.

Alphabet's stock has been on a roll lately. One big beneficiary of that move? Broadcom.

The rise in shares of Alphabet, Google's parent company, has helped inject some energy back into a flagging AI trade. That's had knock-on effects on a range of tech stocks—though few have benefitted as much as Broadcom (AVGO), which counts Google as a major customer for its AI chips.

Broadcom's shares have surged recently, climbing along with Alphabet's (GOOGL, GOOG), which have been lifted by a series of positive developments for the cloud giant from a vote of confidence from Warren Buffett's Berkshire Hathaway to an upbeat reception for its latest AI model and signs of a new deal involving its chips.

Why This Is Significant

Alphabet and Broadcom are seeing their shares advance at a time when some AI favorites like Nvidia are flagging. That could point to some shifts to watch in the AI trade's biggest gainers—and the competitive landscape for chips.

Alphabet shares advanced around 2% to finish at a fresh high Tuesday, and have added about 17% since Berkshire's stake was revealed in a regulatory filing a little over a week ago.

Broadcom's stock, meanwhile, has climbed about 12% over the same period. The shares ticked about 2% higher Tuesday to near their all-time high, while Nvidia (NVDA), Advanced Micro Devices (AMD), and other chipmakers lost ground.

With its recent gains, Broadcom's stock is up close to 70% for the year, making it one of the top performers in the S&P 500 this year so far. It's outpaced Nvidia's roughly 33% climb in 2025, along with the rest of the Magnificent 7.

Bernstein analysts said in a note Tuesday Broadcom "would be a clear winner" of a reported chip deal in the works between Meta (META) and Google, as both Google's custom chip partner of choice and a supplier for Meta.

"And while the stock is growing more expensive perhaps it is justified as we continue to believe that Street estimates look far too low," the analysts said. Bernstein maintained an "outperform" rating and $400 target for the shares. All 12 of the analysts with current ratings surveyed by Visible Alpha consider the stock a buy, though it's surpassed their mean target around $378.

There's still some optimism in Bernstein's outlook for Nvidia, though. Its analysts reiterated a bullish rating and $275 target for the shares, saying that booming demand for AI hardware is likely to benefit both it and Broadcom.

Broadcom "has the narrative at the moment, but [Nvidia's] valuation is looking increasingly attractive and the sell-offs seem overdone to us," they said. "We would be buyers (and continue to like both stocks)."

Source: finance.yahoo

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Daniel Carter

Economic

India has approved a 72.8 billion rupees ($815.74 million) rare earth permanent magnets manufacturing programme, the information minister said on Wednesday, in an effort to cut reliance on imports for the elements critical to sectors ranging from electric vehicles and aerospace to defence and renewable energy.

India's consumption of rare earth permanent magnets – one of the strongest types of permanent magnets – is expected to double by 2030, but it currently meets its demand primarily through imports, according to the government.

The South Asian nation imported 53,748 metric tons of rare earth magnets in the fiscal year ending March 2025.

"Right now, all permanent magnets used in the country are imported from somewhere … with the completion of this programme and the establishment of new plants, our import dependence will practically reduce to zero," Information Minister Ashwini Vaishnaw told reporters after a cabinet meeting.

The new programme will increase self-reliance by supporting the establishment of manufacturing facilities with a total capacity of 6,000 metric tons per annum, India's heavy industries ministry said in a statement.

The capacity will be allocated to five beneficiaries through a global competitive bidding process, each of whom will be allotted up to 1,200 metric tons per annum, it added.