EM LATAM CREDIT: ARGENTINA: Labour and Tax Reforms to Come
[MNI Macro]
• Speaking at the IDEA business conference today, Economy Minister Luis Caputo said that the government is turning its attention to labour and tax reforms, which he indicated are coming. According to a report in Clarin, Caputo said that labour reform is fundamental and that the country needs a more agile and dynamic labour market.
• On tax reform, meanwhile, he said that the government is looking to simplify the tax regime by eliminating many taxes and reducing others, while introducing significant incentives to increase domestic saving.
• On the currency, Caputo reportedly said that a devaluation would not improve competitiveness. Instead, he said that the country would gain competitiveness through the tax cuts, and labour and tax reforms. USDARS has risen 2% today to 1392, but remains 5% below last week’s highs, before the US unveiled its support measures, including direct peso purchases, when necessary
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US TSYS/OVERNIGHT REPO: ON RRP Takeup Ticks Up From Multi-Year Low
Overnight reverse repo facility takeup ticked up for the first session in the last four, but remained near post-2021 lows.
- A $1.9B rise Tuesday from Monday's post-April 2021 low brought takeup to $18.8B.
- That left takeup still flatlining vs the habitual $100B+ levels seen prior to August, and is likely to remain around low levels until month-end when the usual month-/quarter-end pressures tend to increase takeup.
US: Americans' View On Trump Tariffs Coloured By Partisan Affiliation
A new survey from I&I/TIPP shows a stark partisan divide on the benefit or harm of President Donald Trump’s tariffs. TIPP notes, “Overall, 23% said tariffs mostly help U.S. workers, but more than twice as many – 55% – said they mostly hurt consumers. Another 11% said it doesn't make a lot of difference, while 11% were not sure.
- “Democrats (11% "mostly helps workers," 76% "mostly hurts consumers") and independents (14% "mostly helps workers," 58% "mostly hurts consumers") overwhelmingly agreed that consumers were hurt by tariffs.
- “But among Republicans, 41% answered that the tariffs would help workers, compared to just 35% who said they would help consumers.”
Figure 1: Do Tariffs Mostly Help American Workers, Hurt American Consumers, or not make much Difference?
Source: Tipp Insights
US TSYS/SUPPLY: 20Y Review: Solid Details See Little Reaction After Prior Rally
- The 20Y auction saw a small trade through along with more encouraging internals, with a bounce in bid-to-cover and indirect take-up after low readings last month along with the lowest dealer take since mid-2024.
- Little reaction in treasuries however, having already pushed back to joint session highs ahead of the auction. TYZ5 actually dips a tick off those joint highs of 113-18.
- 20Y yields little changed post-results, down -1.2bp on the day and still underperforming the front end with 2Y and 3Y yields down closer to 3bps.
- A minor trade through of 0.2bps (high yield of 4.613% vs WI yield of 4.615%). It follows the 0.1bp trade through last month with a prior five-auction range of a 1.5bp trade through to a 1.2bp tail.
- Bid-to-cover: 2.74, rebounding from a lower 2.54 in Aug after 2.79 in Jul. The five-auction average had been 2.62.
- Indirect take-up: 64.6% after 60.6% in Aug (lowest since Feb 2024 and then Nov 2021) and 67.4%, or vs five-auction average of 66.9%.
- Direct take-up: 27.9% after 21.9% in Aug and a five-auction average of 18.9%
- Dealer take-up: 7.6% after 12.9% in Aug and a five-auction average of 14.2%
