CHILE: Presidential Election Front-Runner Matthei’s Lead Narrows
May-26 13:57
- Speaking late last week, Finance Minister Marcel confirmed that the government is speeding up the approval process for investments to accelerate more than $7.5bn in de-carbonisation projects and other proposals. He expects a rebound in investment to support GDP growth of 2.5% this year, while inflation is seen returning to the 3% target early next year.
- Meanwhile, the latest presidential election poll from Cadem has revealed that front-runner Evelyn Matthei’s lead has narrowed further at 17%, just ahead of far-right Jose Antonio Kast at 16%. Earlier, this month, Matthei had been polling 20%, vs. 14% for Kast. Meanwhile, centre-left presidential election candidate Carolina Toha remains in third place with 10%.
- The poll comes ahead of a debate amongst presidential candidates on the left on radio station AND today.
- On the data front, the calendar is light in the early part of this week, ahead of the usual raft of month-end activity data on Thurs/Fri, including retail sales, IP and the unemployment rate. While retail sales and IP growth are seen moderating in April, the unemployment rate is expected to tick down to 8.6%.
- Amid thin markets, the Chilean peso is trading slightly firmer against the dollar today, with USDCLP 0.4% lower around 935, near the bottom of its recent range. Scope is still seen for a deeper retracement towards 914.00, the Mar 18 low.
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US TSYS: Extraordinary Measures And Cash Look Sufficient To Head Off X-Date
Apr-25 20:32
Treasury has about $164B in "extraordinary measures" available as of April 23 to avoid hitting the debt limit, per its regular report out Friday. That's out of a maximum total of $375B (they have used $211B).
- With Treasury cash looking healthy (around $600B), that's a fair amount of dry powder to get through the summer months to wait out the debt limit impasse. Tax receipts have looked strong with tariff revenues also starting to boost cash flows, further reducing the near-term urgency to adjust bond issuance.
- This has also helped push back analyst “x-date” expectations to later in the summer/September. We expect to hear from Treasury about its own x-date assumptions next week.
US TSYS: Treasury Market Trading Stayed Orderly In April: Fed Report
Apr-25 20:25
Liquidity across financial markets including the Treasury market deteriorated after President Trump's April 2 reciprocal tariffs announcement but market functioning was generally orderly, according to the Federal Reserve's semiannual report on financial stability, released Friday. (PDF link is here)
- Treasury market liquidity has been poor for years and yields were particularly volatile in early April, contributing to a deterioration in market liquidity, the Fed said.
- Nevertheless "trading remained orderly, and markets continued to function without serious disruption," according to the report, which looked at information available as of April 11.
FED: Ex-Gov Warsh: Fed Has Failed To Satisfy Price Stability Remit
Apr-25 20:22
From our Washington Policy Team - Some fairly sharp words today from ex-Fed Governor Warsh on the central bank (who for what it's worth is seen by betting markets as by far the frontrunner for the next Fed Chair):
- The best way for the Federal Reserve to safeguard its independence is for policymakers to avoid expanding the institution's role over time, including wading into policy areas that are outside its core mission, former Fed Governor Kevin Warsh, a leading contender to replace Jerome Powell as chair next year, said Friday.
- "I strongly believe in the operational independence of monetary policy as a wise political economy decision. And I believe that Fed independence is chiefly up to the Fed," Warsh said in a speech at a Group of Thirty event on the sidelines of the IMF meetings. "Institutional drift has coincided with the Fed’s failure to satisfy an essential part of its statutory remit, price stability. It has also contributed to an explosion of federal spending." His speech made no mention of Trump's tariffs or the appropriate monetary policy to deal with them.
- He said the ideas of data dependence and forward guidance widely adopted by Fed officials are not especially useful and might even be counterproductive.
"We should care little about two numbers to the right of the decimal point in the latest government release. Breathlessly awaiting trailing data from stale national accounts -- subject to significant, subsequent revision -- is evidence of false precision and analytic complacency," he said.
"Near-term forecasting is another distracting Fed preoccupation. Economists are not immune to the frailties of human nature. Once policymakers reveal their economic forecast, they can become prisoners of their own words. Fed leaders would be well-served to skip opportunities to share their latest musings."
