EM LATAM CREDIT: ARGENTINA: Labour and Tax Reforms to Come

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.

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

• 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%