ARGENTINA: Court Confirms CFK's Guilty Verdict As She Takes Over PJ Presidency
Argentina's National Court of Appeal on Criminal Matters has upheld the guilty verdict delivered against former President Cristina Fernandez de Kirchner in late 2022 just days before she is set to take over the presidency of the country's main opposition party. Fernandez de Kirchner was sentenced to six years in prison after she was found guilty in Dec 2022 of "fraudulent administration" with regard to the awarding of public works contracts to a friend in exchange for kickbacks. It is unlikely that she will serve any prison time, but the verdict saw her banned from public office for life.
- Despite this, Fernandez de Kirchner is set to be inaugurated as president of the Justicialist Party (PJ) on 17 November. The PJ is the largest force within the broad left-wing Peronist 'Union for the Homeland' (UP) alliance, the largest single bloc in both chambers of Congress.
- The position will make Fernandez de Kirchner the de facto main opposition leader. Since the ouster of the UP in the 2023 general election, Fernandez de Kirchner has engaged in a bitter war of words with President Javier Milei, decrying the major spending cuts and reform packages enacted by his libertarian administration.
- The court ruling could result in a tense political situation come 2027 in the event that Fernandez de Kirchner seeks a third term as president, or a second as vice president given her lifetime ban.
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GILTS: Widening Extends
Gilts have continued to widen vs. Bunds, with the 10-Year spread now over 196bp, set for the highest close since August ’23.
- Little in the way of meaningful upside levels until the psychological 200bp, which protects a cluster of closing highs from summer ‘23.
- Market remains highly attuned to risk of increased gilt issuance, which has driven the widening today.
- Latest estimates of Chinese fiscal support add further pressure in recent trade.
- Gilt futures trade as low as 95.90, initial support at last week’s low (95.83) untested.
- Yields 3-5bp higher on the day, steepening
- PM Starmer pushed back against the idea of a 39% capital gains tax (the top of the range floated by Guardian sources last week).
- Elsewhere, he once again declined to comment on the prospect of lifting national insurance levies on businesses (now becoming widely expected, with workers expected to avoid such a move, owing to pre-election tax promises).
- Hawkish moves in BoE-dated OIS as gilts sell off, contracts through mid-’25 now 0.5-6.5bp less dovish on the day. 22bp of cuts priced for November, 35bp through year-end and 98bp through June.
- SONIA futures +0.5 to -4.0, gilt weakness weighs.
Fig. 1: 10-Year Gilt/Bund Spread (bp)
Source: MNI - Market Nwws/Bloomberg
SECURITY: Netanyahu To Chair Security Meeting To Discuss Iran Response
Independent Journalist Guy Ester reports on X, citing local media, that Israeli Prime Minister Netanyahu, "will chair a security meeting this evening to discuss the response to Iran."
- The meeting comes amid considerable uncertainty over how forceful Israel's response to Iran's ballistic missile attack will be.
- Amichai Stein at KANN reports that, "Iran recently conveyed a message to the US administration through a third countries, saying that if the Israeli response to the missile attack is limited - Iran will see this round as closed - sources familiar with the details tell [KANN]."
- The reported Iranian message to Washington came after US President Joe Biden urged Israeli Prime Minister Benjamin Netanyahu to ensure any retaliation remains "proportional," during their first conversation in nearly two months last Wednesday.
- The fact that Biden yesterday took the rare step of authorising the deployment of US ground troops to Israel for the first time, to operate a THAAD missile defence system, may indicate that the Israeli response could be muscular enough to compel another Iranian ballistic missile barrage. See: SECURITY: US Prepares To Send Ground Troops To Israel
- The THAAD system will enhance Israel's ballistic missile defence after Iranian ordinance penetrated Israel's multilayered air defences earlier this month. The Jerusalem Post reports: "Israeli officials declined to give interception rates... and the low number of casualties was also attributed to the wide availability of bomb shelters throughout the country."
BONDS: MNI Europe Pi (Positioning Indicator): Longs Look Extended
Our latest Europe Pi positioning indicator has just been published and emailed to clients:
- Changes in European bond futures structural positioning have been mostly to the long side since the Eurex quarterly roll in early September.
- Longs pre-September have consolidated (Gilt, Bund), but others (Schatz, Buxl, BTP) have seen longs extend.
- This has left all contracts "long/v long". That said, last week saw longs cut almost across the board.
Full PDF Analysis:
MNIEuropePi-Oct142024.pdf
