The U.S. budget deficit exceeded $1 trillion in February 2025, marking a record high for the fiscal year.  

U.S. government receipts and expenditures set new monthly records. 

Key background: 

The U.S. federal budget deficit surged past $1 trillion for the first time in the early months of fiscal year 2025, marking a record high. For February, the deficit reached over $307 billion, nearly 2.5 times the amount recorded in January and 3.7% higher than the same month in 2024. The latest data, released by the U.S. Treasury Department, underscores the widening fiscal gap despite a slight reduction in government spending on a month-to-month basis. 

Through the first five months of the fiscal year, the deficit has totaled approximately $1.15 trillion, an increase of $318 billion compared to the same period in 2024. This represents a 38% rise in the deficit, setting a new record for the year-to-date period. Both receipts and expenditures hit new monthly records, with the cost of financing the national debt reaching $74 billion for February. While the net interest payment on the $36.2 trillion national debt edged lower from the previous month, year-to-date interest payments had risen to $396 billion. This is second only to spending on defense and health, with Social Security and Medicare being the largest contributors to the overall budget. 

The current fiscal situation follows a similar pattern observed during former President Joe Biden’s tenure, with deficits swelling in the final years of his administration, from $1.38 trillion to $1.83 trillion. In response to the growing fiscal challenges, President Donald Trump has focused on reducing government inefficiency. His administration introduced the Department of Government Efficiency (DOGE), led by Elon Musk, which has pursued cost-cutting measures, including job reductions and early retirement incentives. However, a Treasury spokesperson noted that there has been no significant impact from these efforts so far. 

At the same time, President Trump has advocated for extending the Tax Cuts and Jobs Act from his first term. While he has emphasized the potential economic growth from these tax cuts, think tanks have warned that extending the policy could add an estimated $3.3 trillion to the deficit over the next decade. 

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Walgreens has reached a $10 billion deal to go private with Sycamore Partners.  

Sycamore will acquire Walgreens at $11.45 per share in cash, an 8% premium over the stock’s recent closing price.  

Key Background: 

Walgreens announced Thursday that it has reached an agreement with private equity firm Sycamore Partners to take the company private in a deal valued at approximately $10 billion. Under the terms of the transaction, Sycamore will acquire Walgreens at $11.45 per share in cash, which represents an 8% premium over the stock’s closing price on March 6, 2025. Shareholders may also receive additional payments of up to $3 per share in the future, depending on the sale of Walgreens’ primary-care businesses, including Village Medical, Summit Health, and CityMD. 

This transaction, which includes debt and potential future payouts, could bring the total value of the deal to as much as $23.7 billion. The deal is expected to close by the fourth quarter of 2025. Following the announcement, Walgreens’ stock rose by over 5% in after-hours trading before being temporarily halted. 

The move marks the end of Walgreens‘ nearly 100-year history as a publicly traded company, a period that began in 1927. Once a dominant force in the retail pharmacy sector, Walgreens has faced numerous challenges in recent years, including the end of the Covid-19 pandemic, increased competition from rivals like CVS and Amazon, and struggles within its healthcare expansion efforts. Despite a 15% increase in stock value for 2025, Walgreens’ shares have plummeted by more than 48% over the past year and 70% in the last three years. 

Tim Wentworth, Walgreens’ CEO, expressed confidence that going private would enable the company to execute its turnaround strategy with greater focus. Sycamore Partners, known for its expertise in retail turnarounds, will bring crucial support to the company during this transformation. Walgreens, headquartered in Chicago, currently operates over 12,500 locations globally and employs more than 310,000 people. As part of its restructuring, the company plans to close around 1,200 stores over the next three years, including 500 in fiscal 2025. 

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The U.S. unemployment rate rose to 4.1% in February, up from 4% in January. 

The unemployment rate for Black men aged 20 and older dropped significantly to 5.5% in February, down from 6.9% in January. 

Key Background: 

The U.S. job market experienced mixed outcomes in February, with notable changes in unemployment rates for specific demographic groups, according to the latest data from the U.S. Bureau of Labor Statistics. While the overall unemployment rate increased slightly to 4.1% in February from 4% in January, there was a marked improvement in the unemployment rate for Black men aged 20 and older. The rate dropped to 5.5%, down from 6.9% in January, signaling a positive trend for this group.  

This decline brings Black men’s unemployment rate closer to the 5.6% level seen in December of the previous year. In contrast, Hispanic women experienced a rise in their unemployment rate, signaling challenges for this demographic. The rate for Hispanic women increased, contributing to the overall uptick in the national unemployment figure. Additionally, while Black women’s unemployment rate held steady at 5.4%, it remained unchanged from the previous months. 

The report also noted underwhelming growth in nonfarm payrolls, pointing to potential economic uncertainties. Senior economist Elise Gould of the Economic Policy Institute suggested that the current data may reflect a “calm before the storm,” with the full impact of federal workforce reductions and upcoming tariff decisions still to be fully realized. She noted, “We’re not seeing the layoffs in the data yet, for the most part,” indicating that the labor market could face more volatility in the coming months.  

Despite these concerns, the decrease in unemployment for Black men is viewed as a positive indicator amidst broader challenges in the job market. However, the rise in unemployment for Hispanic women and the overall increase in joblessness reflect ongoing disparities that may require targeted economic interventions.  

Read Also: Euro Zone Inflation Eases to 2.4% in February as ECB Prepares for Sixth Rate Cut

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Eurozone inflation eased to 2.4% in February, slightly lower than January’s 2.5%, but above economists’ expectations of 2.3%. 

Core inflation, which excludes energy, food, alcohol, and tobacco, decreased to 2.6% from 2.7% in January. 

Key Background: 

Eurozone inflation decreased to 2.4% in February, according to flash data from Eurostat, marking a slight dip from January’s 2.5%. While this represents a moderate decline, it still exceeded the 2.3% forecast by economists polled by Reuters. Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, stood at 2.6%, also lower than the previous month’s 2.7%. 

A notable factor contributing to the easing of inflation was a reduction in services inflation, which dropped to 3.7% from 3.9% in January. Additionally, energy price hikes showed a significant slowdown, rising by only 0.2% in February compared to 1.9% in January. Analysts see this as a positive development, signaling a potential trend towards lower core inflation. Jack Allen-Reynolds, Deputy Chief Eurozone Economist at Capital Economics, suggested that this could lead to a more substantial reduction in the core inflation rate later in the year. 

Despite these encouraging signs, inflation is still expected to remain relatively stable due to persistent food inflation and slight energy price increases. Geopolitical risks, such as the possibility of a trade war and the impact of rising energy prices, add uncertainty to the inflation outlook, according to Bert Colijn, Chief Netherlands Economist at ING. 

The European Central Bank (ECB) remains optimistic about the inflation trajectory, with policymakers expecting inflation to approach the 2% target. The ECB is widely anticipated to announce another interest rate cut later this week, marking the sixth reduction since June 2024. This move is expected to be accompanied by an assessment of the current economic situation, particularly inflation dynamics and potential monetary policy adjustments. Markets will closely monitor these developments as they weigh the ECB’s next steps in managing economic stability in the region. 

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Personal income saw a sharper-than-expected increase of 0.9% in January, surpassing the anticipated 0.4% rise. 

Despite the income boost, consumer spending fell by 0.2%, contrary to expectations for a 0.1% increase. 

Headline inflation showed a slight easing, with the overall PCE index rising by 0.3% and posting a 2.5% annual rate. 

Key Background: 

In January, the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, increased by 0.3%, reflecting a 2.5% annual rate. Excluding volatile food and energy prices, the core PCE also rose by 0.3% for the month, bringing the annual rate to 2.6%. The Federal Reserve closely monitors this core figure as it offers a more accurate reflection of long-term inflation trends. 

This data, which was in line with Dow Jones consensus estimates, suggests a slight easing in inflation compared to December, where the core PCE stood at 2.9%. The 12-month core measure marked a step-down, while headline inflation saw a modest decline of 0.1 consensus point. Despite the positive inflation report, analysts, including Jose Rasco from HSBC, indicated that the Fed will remain cautious, keeping rates steady for now. 

Meanwhile, personal income grew by a higher-than-expected 0.9%, surpassing the forecasted 0.4% increase. However, consumer spending showed a surprising decline of 0.2%, contrary to the expected 0.1% gain. The personal savings rate also increased to 4.6%, suggesting a preference for saving over spending. 

As the Fed assesses the path of inflation, futures markets have slightly raised the probability of an interest rate cut by June. However, policymakers are likely to wait for further evidence of sustained inflation control before making any significant rate adjustments. The Fed’s strategy remains focused on returning inflation to its 2% target over the longer term. 

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Nvidia’s automotive and robotics segment revenue surged 103% year-on-year to a record $570 million in Q4 of fiscal year 2025. 

The segment’s annual revenue reached $1.69 billion, marking its second consecutive year above $1 billion. 

Key Background:  

Nvidia’s automotive and robotics division has achieved a significant milestone, with its revenue more than doubling year-on-year to a record $570 million for the fourth quarter of the 2025 fiscal year. This surge was driven by the growing demand for driver-assistance technology, particularly through Nvidia’s self-driving platforms. As a result, the company’s total revenue for the automotive segment reached $1.69 billion for the fiscal year, marking its second consecutive year above the $1 billion threshold. 

Despite Nvidia’s core business being its AI-powered chip systems, the company has identified its driver-assist technologies as a key growth area, with the potential to evolve into a “billion-dollar” business. This prediction highlights the increasing relevance of its products within the automotive industry, as companies worldwide seek to integrate autonomous driving capabilities into their vehicles. 

The growth of Nvidia’s automotive division is attributed to the expansion of its Advanced Driver Assistance Systems (ADAS) and autonomous vehicle technologies, powered by its DRIVE platform. As Brady Wang, a semiconductor analyst at Counterpoint Research, noted, Nvidia’s increasing exposure to ADAS, robotics, and self-driving vehicles is driving this growth. CEO Jensen Huang envisions a future where every car on the road will be autonomous, with Nvidia-supported AI systems refining data collected by these “robotic” vehicles. This perspective underscores the transformative potential of Nvidia’s automotive segment in the coming years. 

Industry experts, such as Gene Munster, managing partner at Deepwater Asset Management, believe that Nvidia’s investment in autonomous vehicle technologies, alongside the rapid development of humanoid robots, could further expand demand for its chips. Currently, Nvidia’s automotive and robotics division accounts for just 1.45% of its total revenue, but analysts anticipate continued growth due to the increasing adoption of more advanced systems in the market. With the automotive sector poised for long-term expansion, Nvidia’s continued focus on autonomous driving and robotics is expected to further solidify its position in this rapidly evolving industry. 

Read Also: Anthropic Nears $3.5 Billion Funding Round Tripling Its Valuation to $61.5 Billion

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Anthropic is in talks to raise $3.5 billion in a new funding round, significantly higher than the initial $2 billion target. 

The funding round is set to triple Anthropic’s valuation to $61.5 billion. 

Lightspeed Venture Partners is leading the round, with participation from General Catalyst and others. 

Key Background: 

Anthropic, the AI startup renowned for its chatbot Claude, is in advanced talks to raise $3.5 billion in a new funding round, a significant increase from initial expectations. This funding, which is being led by Lightspeed Venture Partners with contributions from General Catalyst and others, will elevate the company’s valuation to an impressive $61.5 billion, tripling its previous value. 

The deal reflects the continued strong investor interest in top-tier artificial intelligence firms, despite potential challenges from competitors such as China’s DeepSeek. Anthropic, which counts Amazon and Google among its backers, had initially sought $2 billion for this round, according to sources familiar with the negotiations. 

The company, founded by former OpenAI employees, has experienced rapid growth since its inception. Its last private market valuation stood at $18 billion, with Amazon investing $8 billion into the startup. Anthropic’s growth is driven in part by the popularity of its chatbot, Claude, which has gained traction for its advanced conversational abilities. 

Earlier this week, Anthropic unveiled what it described as its most intelligent AI model yet, a hybrid system combining reasoning capabilities with traditional real-time answer generation. This new model marks a significant step forward in AI development, showcasing Anthropic’s commitment to pushing the boundaries of artificial intelligence technology. The upcoming funding round signals strong investor confidence in Anthropic’s future prospects as it continues to develop cutting-edge AI models. As the company competes in a rapidly evolving landscape, its ability to attract top investors is a clear indication of the growing demand for AI-driven innovations. 

Read Also: Nvidia’s Automotive Segment Sees Record Growth Fueled by Rising Demand for Driver-Assistance Technology

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Bowman stated that further interest rate cuts are contingent on seeing more progress in inflation reduction. 

While Bowman expects inflation to decelerate in 2025, she acknowledged that disinflation may take longer than hoped. 

Inflation exceeded expectations, rising 0.5% month-over-month in January, bringing the annual inflation rate to 3%, higher than the forecasted 2.9%. 

Key Background: 

Federal Reserve Governor Michelle Bowman emphasized the need for further progress in controlling inflation before considering additional interest rate cuts. In a speech on Monday, Bowman stated that while she expects inflation to continue its deceleration throughout 2025, the pace of disinflation may take longer than anticipated. She stressed the importance of ensuring sustained progress in reducing inflation before the Fed makes any adjustments to its current policy. 

Bowman highlighted that the Federal Reserve’s monetary policy is currently in a favorable position, but more data is required to demonstrate continued inflationary progress. “I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range,” she said. 

Although the overall inflation rate has shown signs of improvement, Bowman noted that rising core goods prices, particularly since last spring, have hindered more rapid progress. She also acknowledged ongoing risks to price stability, citing the strength of the labor market as a factor contributing to these uncertainties. The most recent consumer price index (CPI) data revealed that inflation unexpectedly rose by 0.5% month-over-month in January, surpassing the Dow Jones estimate of a 0.3% increase. This resulted in an annual inflation rate of 3%, which was above the consensus forecast of 2.9%. 

At its January policy meeting, the Federal Reserve opted to maintain its target interest rate range at 4.25% to 4.5%, signaling a cautious approach. Bowman noted that this stance allows the Fed to remain patient and closely monitor evolving inflation data. Additionally, she mentioned that the current policy framework offers room to evaluate other economic indicators and assess the impact of fiscal policies. The outlook for interest rate cuts in 2025 has been tempered by concerns over President Trump’s trade policies, which have fueled inflationary pressures. As a result, market expectations for rate reductions this year have been revised downward. Traders are now anticipating only a single quarter-percentage-point rate cut, according to CME Group data. 

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January CPI is expected to show a 0.3% monthly increase, with a 2.9% annual inflation rate, indicating inflation remains above the Federal Reserve’s target. 

Excluding food and energy, core CPI is forecasted to rise 0.3% monthly and 3.1% annually, reflecting minimal change from December. 

Key Background: 

The January Consumer Price Index (CPI) report, expected to be released on Wednesday, is anticipated to confirm that inflation remains a persistent issue for the U.S. economy. The forecast suggests a monthly increase of 0.3% for the all-items index, with an annual inflation rate of 2.9%. The core CPI, excluding volatile food and energy prices, is expected to rise by 0.3% monthly and 3.1% year-over-year, showing minimal improvement from December’s figures. 

Inflation has consistently exceeded the Federal Reserve’s target, and despite a strong labor market and overall economic stability, the path forward remains uncertain. Bank of America economist Stephen Juneau highlighted that if the January CPI aligns with predictions, the Fed may be compelled to maintain its current policy stance for the foreseeable future. With inflationary pressures holding above target and no immediate signs of a slowdown in the labor market, rate cuts are unlikely in the near term. Traders, however, anticipate a possible quarter-point reduction in rates by July. 

The CPI report’s details will likely reveal price increases in key areas such as auto prices, insurance, and communications services, which are expected to counterbalance the moderate downward pressures in categories like airfares and housing costs. Notably, rent-related costs, which account for a significant portion of the CPI, continue to contribute to the persistent inflation rate, complicating efforts to bring it down to the Fed’s 2% target. 

Compounding the situation are potential inflationary effects from the tariffs imposed during the Trump administration. Economists from Goldman Sachs warn that escalating tariffs could act as an inflationary counterweight, even as disinflationary trends emerge in sectors like automobiles, housing, and labor markets. 

Amidst these mixed signals, Federal Reserve officials, including Chair Jerome Powell, have indicated that they are in no rush to cut rates. Cleveland Fed President Beth Hammack echoed this sentiment, noting the enduring inflationary pressures, particularly from tariffs, as a key reason for maintaining the current policy stance. With inflation remaining above target, the Fed’s approach will likely continue to focus on carefully navigating these economic challenges. 

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Rolls-Royce is the world’s second-largest maker of aircraft engines after CFM International and has major businesses in the marine propulsion and energy sectors. 

Make in India is an initiative by the Government of India to create and encourage companies to develop, manufacture and assemble products in India and incentivize dedicated investments into manufacturing. 

Prime Highlights: 

The company aims to broaden its partnerships in India, supporting both business growth and the Indian government’s ‘Make in India for the world’ initiative. 

Rolls-Royce has helped enhance in-country manufacturing to meet global quality standards and plans to develop local capabilities for producing complex engine components. 

Key Background: 

Rolls-Royce, a global leader in aerospace and defense technology, has announced plans to double its sourcing from India within the next five years. This initiative aims to enhance the company’s supply chain by increasing the procurement of complex parts for advanced aerospace engines, naval propulsion systems, diesel engines, and gas turbine engines. 

The company currently sources a variety of high-precision engine components and parts from Indian suppliers for its civil aerospace, defense, and power systems sectors. While Rolls-Royce did not disclose the total value of these sourced products, the company emphasized the strategic importance of India in its supply chain. 

Rolls-Royce’s Chief Transformation Officer, Nicola Grady-Smith, highlighted India’s emergence as a preferred global sourcing hub. The company intends to expand its partnerships in India to support its business growth while also aligning with the Indian government’s ‘Make in India for the world’ initiative. Grady-Smith noted that Rolls-Royce has significantly contributed to enhancing in-country manufacturing capabilities, meeting the highest global quality standards. The company’s goal is to strengthen relationships with both existing and new Indian suppliers to facilitate the local manufacturing of complex engine components for global markets. 

Rolls-Royce has built a robust ecosystem in India, encompassing strategic partnerships, skilled talent, engineering expertise, digital capabilities, service delivery, supply chain, and manufacturing. This ecosystem is bolstered by a legacy of successful technology transfers, particularly in the defense sector, where Rolls-Royce has licensed engine production in collaboration with local entities. In addition to supporting India’s defense vision, Rolls-Royce remains committed to co-development opportunities, particularly in combat engine technologies, in partnership with India’s armed forces. The company’s long-standing collaborations with organizations like Hindustan Aeronautics Ltd, Force Motors, Tata, Bharat Forge, and Godrej & Boyce further strengthen its foothold in the region. Rolls-Royce currently employs over 2,000 highly skilled engineers in India, contributing significantly to global development programs. 

Read Also: Hyundai Motor India Stock Hits Two-Month High on Strong Exports Growth and Market Optimism

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