Trump, E.U. reach trade deal with 15% tariffs
Trump, E.U. reach trade deal with 15% tariffs
July 28, 2025 | 4:20 AM GMT
President Donald Trump and European Commission President Ursula von der Leyen said July 27 they agreed to a 15 percent tariff on most E.U. goods after months of talks.
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Fed expected to keep rates unchanged as it sifts through mixed economic data
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A surge in prices of goods like furnishings and apparel helped drive overall consumer inflation to an annualized 3.5% pace in June. So soon after a bout of 40-year-high inflation, policymakers fear fast-rising prices could "freak out" households, as Chicago Fed President Austan Goolsbee sometimes phrases it, triggering a wider inflationary spiral. While Fed Chair Jerome Powell says that is only one of many possible scenarios, he has argued the central bank can wait to learn more before adjusting rates, especially with a 4.1% unemployment rate near or below estimates of full employment. Other data and the outlook amid Trump's broader economic program, including tax cuts and deregulation, invite differing views on the central bank's policy-setting Federal Open Market Committee. "Considering the clear divergence in the near-term policy outlook between (Fed Governor Christopher) Waller and (Fed Vice Chair of Supervision Michelle) Bowman and the other FOMC participants, we expect both Waller and Bowman to dissent in favor of a 25-bp (basis-point) cut," wrote analysts at Nomura Securities, one of several Wall Street firms predicting the first double dissent from Fed governors since 1993. Both Waller and Bowman were appointed to the Board of Governors by Trump, who has excoriated Powell for resisting the White House's demand for an immediate rate cut and broached the idea of firing the Fed chief before his term expires next May. Last week, during a rare but tense visit to the Fed's headquarters in Washington, Trump once again pressed the case for lower rates, though he also said he didn't think it was necessary to fire Powell. Waller, who has been mentioned as a possible successor to Powell, sees private-sector job growth nearing stall speed and fears companies could turn to layoffs in the absence of easier credit conditions. Private-sector hiring accounted for just half of the gain of 147,000 U.S. jobs in June, and Waller says other data suggests even that reading overestimates the true increase. Bowman has also expressed worries about labor market deterioration and feels a rate cut may be needed to prevent it. Both are skeptical tariffs will lead to persistent inflation. Several others, including Boston Fed President Susan Collins, also see recent muted price increases as suggesting tariffs may not push up inflation as much as earlier thought. RECORD-BREAKING ECONOMY Ahead of the scheduled release on Wednesday of the Fed's policy statement, the Commerce Department is widely expected to report that economic activity reaccelerated in the second quarter, pushing total output above $30 trillion in non-inflation-adjusted terms for the first time. That may shore up Trump's bragging rights to what he says is a U.S. economy that would take off like a rocket if only the Fed cut rates. But central bankers will see it as more ambiguous. The expected increase follows a first-quarter drop in GDP from a historic rush to front-run Trump's tariffs on imports from U.S. trading partners. "While a sharp reversal in imports will mechanically boost Q2 GDP, tariff-induced cost pressures, persistent policy uncertainty, severely curtailed immigration, and elevated interest rates are collectively dampening employment, business investment and household consumption," wrote Gregory Daco, chief economist at EY-Parthenon. 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In another sign the economy isn't rolling over, Fed data shows manufacturing output grew last quarter, albeit by a slower 2.1% annualized pace than the first quarter's 3.7% pace. A measure of how fully firms are using their resources edged up to 77.6% in June from 77.5% in May. Still, business investment may be faltering. Data on Friday showed non-defense capital goods orders excluding aircraft unexpectedly dropped 0.7% in June as firms grew more cautious about spending. Other data points to a weakening economy, bolstering the minority argument for rate cuts soon. Employment growth has slowed and hiring breadth is narrowing, led by just a few service-providing sectors. Finding a job after losing one is getting harder. Half of those collecting unemployment benefits remain on the jobless rolls for at least two-and-a-half months. And the housing and construction sectors are clearly on the back foot, feeling the drag of 30-year fixed-rate mortgages hovering near 7%. 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Novo Nordisk faces 'show me' moment to boost Wegovy growth after US copycat ban
By Maggie Fick LONDON (Reuters) -A U.S. ban on copycat versions of Novo Nordisk's Wegovy has begun to lift use of the weight loss drug, but the company will need to show more robust growth in the months ahead to bolster market confidence, investors and analysts say. New Wegovy prescriptions have increased by about 33% since May 22, when a U.S. Food and Drug Administration ban on so-called compounded versions of Wegovy took effect, amounting to 181,200 in the week ended July 18, according to data from IQVIA that was shared with Reuters by industry analysts. Total Wegovy prescriptions have also increased, narrowing the lead for Eli Lilly and Co's Zepbound. In the week ended May 23, U.S. Zepbound prescriptions exceeded Wegovy by nearly 175,000. By July 18, the gap was about 133,000. Early signs of a shift come at a critical juncture for Novo. After Wegovy's initial stunning success, investor confidence was rattled when Zepbound and compounders started to slow the drug's growth. And then in May, the Danish company cut its full-year sales and earnings forecasts and announced the surprise exit of Chief Executive Lars Fruergaard Jorgensen, citing market challenges and a stock price nearly 60% below its 2024 peak. Jorgensen said at the time he expected the FDA compounding ban to lift sales in the second half of this year. Investors are keen to hear whether that is still likely when the company reports quarterly earnings on August 6. That leaves the drugmaker in what Barclays analyst Emily Field called a "show me" phase - no longer buoyed by optimism about a turnaround but under pressure to deliver. She has an "overweight" rating on Novo's shares. "We thought this trajectory change (in new prescriptions) would get the shares moving, but not so far," Berenberg analyst Kerry Holford told Reuters. "I suspect investors are now waiting for the (second quarter) update - will they/won't they trim guidance range? I think they will trim the top." Berenberg has a "hold" rating on Novo. Novo did not respond to a request for comment. Investors and analysts note that the IQVIA prescription data is incomplete, because it does not capture sales of Wegovy through the company's direct-to-consumer platform, NovoCare, launched in March. They estimate the channel is still a small slice of overall Wegovy volume. "We would hope to see strong growth from the NovoCare channel but are cognizant that this may come at initially lower prices" due to discount offers, said Marcus Morris-Eyton, a portfolio manager at Alliance Bernstein, whose fund holds Novo shares. "Sentiment towards Novo Nordisk is currently exceptionally weak, but given low expectations, the low valuation and hopefully accelerating prescription data in (the second half of 2025) we believe the market is underestimating Novo's long term growth potential," he said. BRINGING BACK PATIENTS Booming sales of Wegovy catapulted Novo to become Europe's most valuable listed company, peaking in June 2024 at about 615 billion euros, after the weekly injection became the first highly-effective obesity treatment approved in the U.S. in 2021. But supply disruptions and gaps in health insurance coverage for Wegovy helped fuel the market for cheaper compounded - or copycat - versions, which are allowed under U.S. law when drugs are in shortage. Investor sentiment on Novo soured after the company lost ground to U.S. rival Eli Lilly, which launched Zepbound in late 2023. In its first full-year forecast downgrade since Wegovy's launch, Novo said in May it expected local-currency sales growth of 13–21%, down from a previous forecast of 16–24%. Operating profit growth is projected at 16–24%, versus 19–27% previously. Capturing more of the patients who had turned to compounded drugs is key to meeting those targets. The FDA determined that Wegovy was no longer in shortage in February, leading to the ban on compounded versions. Novo has rolled out new tactics to bring patients back, including a limited-time discount for one month's supply, and secured better coverage from insurer CVS Health. Analysts at Berenberg and UBS are sceptical these moves will provide enough momentum and expect that Novo will reduce or narrow its full-year guidance ranges, according to research notes. TD Cowen said the outcome was hard to predict due to limited visibility on NovoCare. Bank of America and Guggenheim said they did not expect another guidance cut and Barclays said it was unlikely. ($1 = 0.8513 euros)
