The German Cabinet greenlit on Wednesday a new tax on sugary drinks, aiming to raise revenue and incentivize manufacturers to make healthier products.

The tax, which still requires parliamentary approval, would apply to sweetened drinks with a total sugar content of at least 5 grams per 100 milliliters. According to the Finance Ministry, these include lemonades, iced teas, energy drinks and fruit juices with added sugar.

Alcoholic drinks, non-alcoholic beers, wines and cocktails would not be affected. Pure fruit and vegetable juices, unsweetened fizzy drinks and those containing sweeteners – so-called zero drinks – would also be exempt.

Two tax bands are planned depending on sugar content. Exemptions are envisaged for small producers, though the precise thresholds have yet to be finalized.

The German government is seeking an exemption for all businesses producing a maximum of 1 million liters per year, but this requires authorization from the European Commission.

The new tax is due to come into force on July 1, 2027. It could generate 690 million euros ($772 million) for the federal government next year, with revenues of 925 million euros projected for 2028 and between 875 million euros and 890 million euros in subsequent years.

The revenue is intended to help keep contributions to the statutory health care system stable. At the same time, the tax is designed to incentivize beverage manufacturers to reduce the sugar content of their products.

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Higher interest rates on France’s government debt are an alarm signal for the country, even though Paris retains bond investors’ confidence, the country’s finance minister said Wednesday, as concerns grow over the sustainability of the French budget.

“We have the confidence of the markets in the sense that we have no trouble issuing debt,” Roland Lescure told Franceinfo radio. “But it costs us more, and that is an alarm signal we all need to take on board.”

With investor worries mounting over France’s debt and the ability of the government to pay it down, Paris has to offer higher interest rates on the government bonds it issues to reward investors for the perceived additional risk.

France’s 10-year government bond yield has already neared 5% on the markets in recent weeks.

EU Economy Commissioner Valdis Dombrovskis told Agence France-Presse (AFP) on the sidelines of the IMF-World Bank annual meetings in Bangkok on Tuesday that “it’s important to have clarity about the budget” in France.

IMF chief Kristalina Georgieva warned meanwhile that it “would take time” before France’s debt levels could come down to levels “that are providing confidence – full confidence – to people and to the investor community.”

French public debt is projected to reach a record high of 121.7% of GDP in 2027 under the government’s budget proposal, up from 119% at the end of June.

The budget that the French government is seeking to push through parliament also envisages pushing down the budget deficit to 5% of GDP next year, from an estimated 5.4% for 2026.

But its lack of a majority in the lower house of parliament has made adoption of the budget an uphill struggle.

The situation is further complicated by France’s approaching presidential election, with President Emmanuel Macron, a centrist former investment banker, unable to seek a new term.

Front-running candidate Marine Le Pen of the far right, in an interview with The Financial Times published Wednesday, acknowledged the “gigantic, enormous debt… that could become uncontrollable.”

She wants to impose 140 billion euros in cost-savings that would come partly from slashing the French contribution to the EU budget.

“We know there will be a tough debate, even a trial of strength” with Brussels, she said.

Speaking in Bangkok, Bank of France Governor Emmanuel Moulin called on French political leaders to “shoulder their responsibilities” to ensure the adoption of a budget, in apparent reference to a constitutional provision that allows governments to force through legislation without a vote.

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U.S. consumer inflation jumped more than expected in September, government data showed Wednesday, as the U.S. war with Iran continued to push energy costs higher, deepening strains on American households ahead of next month’s midterm elections.

The uptick underscores voter worries over high costs of living, and comes as President Donald Trump is campaigning in U.S. states to shore up support for his Republican party as it tries to retain control of Congress.

The consumer price index (CPI) rose 3.7% year-over-year in September, the Department of Labor said, more than the 3.6% analysts forecast according to MarketWatch.

This was a notable acceleration from 3.4% in August, in one of the last major economic reports before the Nov. 3 vote.

Inflation picked up pace on a month-over-month basis too, accelerating from 0.4% in August to 0.6% last month.

Gasoline costs accounted for more than half of the jump, surging 9.1% on a monthly basis, Wednesday’s report said.

Energy prices have jumped since the U.S. and Israel attacked Iran in late February, prompting Tehran to block off the Strait of Hormuz, a vital route for oil and gas shipments.

Average prices at U.S. gasoline pumps have surged more than 45% since the Middle East war to $4.33 per gallon, according to AAA data.

Diesel prices have surged even more, by 67.7%, boosting the cost of transporting goods and threatening further spillovers to consumers.

“Again, the Iran-U.S. conflict has led to higher motor fuel costs that everyone is experiencing,” ING economist James Knightley told Agence France-Presse (AFP).

“The U.S. is also seeing substantial increases in airline fares,” he said, adding that this will likely contribute to additional price pressures.

With the underlying U.S. economy remaining strong as massive spending linked to the artificial intelligence sector boosts demand for chips and labor, economists warn that higher costs could continue filtering through to households.

Excluding volatile food and energy prices, core CPI was up 2.6% from a year ago.

But Knightley does not expect the latest report to prompt the Federal Reserve (Fed) to raise interest rates at its Oct. 27-28 meeting.

Several Fed policymakers have suggested “that we don’t need to see back-to-back interest rate increases,” he said, instead leaning towards “a slow and steady” approach.

Industries sensitive to interest rates, like housing, are already under pressure from steeper borrowing costs.

“I think the Federal Reserve just wants to be a little bit careful and cautious in terms of its policy tightening,” Knightley said.

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Outflows from investment funds caught up in last month’s turmoil have not significantly weakened Turkish residents’ preference for lira-denominated assets, the chief of the country’s central bank said Wednesday.

Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan said proactive measures had limited potential spillovers from funds subject to trading restrictions, while tight monetary policy supported demand for the lira.

The crisis began after several funds said they could not meet investors’ redemption requests during a market sell-off. That prompted a wide investigation into suspected price manipulation in a number of thinly traded stocks.

The Capital Markets Board (SPK) suspended trading in 131 funds run by seven asset management companies and placed them into liquidation, affecting nearly half a million investors.

Last week, Karahan said a ​significant part ⁠of the outflows from funds had moved into bank deposits, which he said had increased by TL 800 billion ​($16.2 billion) during the period.

“Fund outflows have not materially weakened residents’ preferences for lira assets,” Karahan said on Wednesday during the International Monetary Fund and World Bank annual meetings in Bangkok.

“Residents’ preference for Turkish lira remains robust overall.”

Karahan reiterated that the bank would maintain its tight policy stance until price stability is achieved, supporting disinflation through demand, exchange rate and expectations channels.

He said interest rate decisions would take into account actual and expected inflation, alongside its underlying trend, to ensure the degree of tightness needed for a disinflation path consistent with the bank’s interim targets.

Decisions would remain cautious and be taken on a meeting-by-meeting basis, he added, with further tightening if the inflation outlook deviated significantly from those targets.

Underlying inflation moderates

Karahan said supply-side pressures had slowed disinflation, with energy prices exerting a major influence this year. Nevertheless, underlying inflation was moderating as weaker demand cushioned inflationary pressures.

Türkiye’s annual inflation dipped below 30% for the first time in almost five years in September. Consumer price growth eased more than expected to 29.73% from 31.51% in August.

That marked the fourth consecutive month of decline, after the downward trend that started in mid-2024 stalled earlier this year following a sharp rise in energy prices caused by the Iran war.

Monthly price growth also came in below expectations at 1.84%, the same as in August.

Some analysts said the September reading raises the prospect of an interest rate cut at the Oct. 22 meeting.

The bank has kept its benchmark one-week repo rate at 37% this year, as it monitored ‌the inflation impact of the Iran war.

Rent inflation has been easing, with leading indicators pointing to further moderation. However, increases in transportation and communication prices partly offset declines in rent and education inflation.

Karahan said inflation expectations warranted continued caution, while high-frequency indicators confirmed weak domestic demand in the third quarter. Macroprudential policies also supported slower credit growth.

Despite weaker external demand prospects for 2026, Karahan said the trade deficit remained moderate and tourism revenues were close to last year’s levels, helping contain the current account deficit.

Türkiye’s sliding-scale fuel tax mechanism had restrained fuel price increases, he said, adding that gold price fluctuations amplified volatility in reserve buffers.

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China’s exports surged again sharply in September, official data showed Wednesday, putting it on course for another record annual trade surplus and likely more tensions with the European Union and the U.S.

The world’s second-largest economy recorded a $133.5 billion trade surplus in September, the most since January 2025, driven by exports surging 36.3% year-over-year, according to China’s customs administration.

Imports also grew 31%, but China’s cumulative trade gap through the end of September still reached $938.1 billion, putting it on course to break the record $1.2-trillion total recorded last year.

The data came days after the EU trade chief Maros Sefcovic held talks in Beijing aimed at reducing what he called an “unsustainable” gap between imports and exports of around 1 billion euros a day.

Shipments to the 27-nation bloc rose 25.3% in September, while imports were flat, pushing China’s trade surplus with the bloc to new heights.

“China’s trade surplus with the EU and the U.K. also reached a new high, which will likely add to trade tensions,” said Nguyen Hoang Nam, a China economist at Capital Economics.

Talks last week between Sefcovic and Chinese counterpart Wang Wentao ended with an agreement to limit exports of Chinese hybrid vehicles to Europe.

Sefcovic told reporters Friday that this was a “first step” toward rebalancing trade with China, which the EU accuses of using subsidies and unfair trade practices to outcompete European firms.

“Brussels is considering expanding restrictions to more strategic sectors, though we estimate that the impact of this on China’s economy would be small,” Nguyen wrote.

Shipments to the U.S. rose 39.6% in September, up from a low base last year when trade cratered after Beijing and Washington slapped punitive tariffs on each other’s goods.

Chinese President Xi Jinping met with Donald Trump last month in Washington, where the two sides vowed to extend a trade truce they agreed in October 2025 and to explore tariff cuts on $30 billion of goods on each side.

AI demand

Imports and exports both grew faster than the 25% and 25.7% increases predicted by a Bloomberg survey of analysts, driven by demand in China and abroad for AI-related products like semiconductors and computing equipment.

But growth was mainly caused by price increases for many of these products.

September’s exports of integrated circuits, for example, rose just 1% in volume but by 136% in dollar terms.

Vehicle export volumes, however, soared 56.3% compared with September last year, hinting at strong foreign demand for Chinese electric vehicles.

With domestic demand weak by comparison, as retail sales grew just 0.4% year-over-year in August, Beijing has relied on exports to meet its annual economic growth target of 4.5% to 5%.

On Tuesday, the IMF downgraded its growth forecast for China to 4.5%, slowing to 4% in 2027.

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Bank of America has been hit with a $1.2 billion fine for allegedly violating anti-money laundering and sanctions laws, the U.S. Treasury Department said Tuesday.

The fines on America’s second-biggest bank amount to the third-largest in the department’s history.

The Treasury Department said the fine is due to the bank’s failure to report more than $5 billion in suspicious activity to the government, including $1 billion that posed national security-related and other priority illicit finance risks.

“Financial institutions are on the ​front lines of protecting our economic and national security,” Treasury Secretary Scott Bessent said in a statement. “When a bank of this size ​fails to meet its anti-money laundering and sanctions obligations, the consequences extend far beyond its own walls, exposing the ⁠entire U.S. financial system to significant illicit finance risks,” he noted.

“Today’s actions send a clear message that even the biggest financial institutions are not above the law.”

Treasury said Bank of America also reached an $11.6 million settlement with the department’s Office of Foreign Assets Control over “apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism.”

In a statement, Treasury said its Financial Crimes Enforcement Network (FinCEN) assessed the $1.2 billion penalty for Bank of America’s “failure to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit finance along the southwest border.”

The penalty includes $750 million that will go to the U.S. Office of the Comptroller of the Currency, the largest fine ever imposed by that federal bank regulatory agency.

Treasury said that Bank of America “admits that it willfully violated” the 1970 Bank Secrecy Act, which requires banks to help the government detect and prevent money laundering.

“Financial crime compliance is serious, and we are responsible for getting it right,” said a Bank of America spokesperson in a statement. “We worked with regulators to reach these penalty resolutions stemming from violations cited in the previously reported 2024 (Comptroller of the Currency) Consent Order and FinCEN’s investigation.”

“We have invested billions of dollars in technology and dedicated thousands of employees to combat financial crime, and our team is far along with and committed to completing the work required to address the issues raised by our regulators,” the statement said.

The spokesperson added that the bank’s third-quarter results due for release on Wednesday would include a non-tax-deductible charge of $1.2 billion, which will reduce quarterly net income ‌by approximately ⁠17 cents a share.

Analysts have estimated adjusted EPS of $1.10, according to mean estimates compiled by LSEG, but that excludes one-offs like this fine.

Shares were down 2.7% in after-hours trading after closing the day down 1.1%.

The penalty is likely to add to negative investor sentiment and raise concerns about higher expenses and whether Bank of America can maintain its roughly $6 billion quarterly share buyback pace, UBS analyst Erika Najarian said in a note.

With earnings due ​on Wednesday, “we think shares likely underperforming at ​open,” she said.

She noted there ⁠was no asset cap, a regulatory penalty that would limit how large the bank could grow.

The fine comes days after American Express was also hit with a $350 million penalty for similar anti-money ​laundering shortcomings.

The latest action is the third-largest penalty ever issued by the Treasury Department, behind a roughly $4 billion settlement in 2023 with Binance, the world’s largest cryptocurrency exchange, and an approximately $3 billion settlement with Canada-based TD Bank the following year. Both those historic actions happened as part of the Biden administration’s focus on anti-money laundering and efforts to promote compliance with the then-emerging virtual currency industry.

Months later, Binance founder and CEO Changpeng Zhao, was sentenced to four months in prison over charges that he looked the other way as criminals used his platform to move money connected to child sex abuse, drug trafficking and terrorism.

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