The president of the United States Federal Reserve (Fed), Jerome Powellis the host in Jackson Holethe important event that has brought together the main leaders of the world’s central banks since 1982. On this occasion, They will focus their attention on the expected drop in interest rates in the United States, which will have a direct impact on the global market but will also have its counterpart in the local market.
Within this event, all eyes are on the clues that could be given, both Fed Chairman Jerome Powell, Bank of England Governor Andrew Bailey, and European Central Bank (ECB) Chief Economist Philip Lane.
Any hints they give in their speeches can be interpreted by the market as a positive signal, if it is confirmed that the decline is near, or negative, if there are any obstacles to completing this plan.
It should be noted that this happens after the details that emerged on Wednesday from the Fed’s “minutes” of its July meeting, in which the majority of the institution’s leaders expressed their support for cutting interest rates at the institution’s next meeting in September.
The “minutes” also noted, the “confidence” of the members of the Federal Open Market Committee (FOMC) in the face of data showing that “inflation is moving toward the organization’s goal” of 2% per year. This gave a boost to markets that, in the previous weeks, had been very nervous about the possibility that the recession in the United States would finally materialize, which even led to pressure on the Fed to call an emergency meeting.
Fed rate cut: what will be the impact on Argentine assets?
The financial analystGabriel Bagattinihe said in dialogue with Scope on how a possible cut in interest rates by the Fed could impact local stocks and bonds. “This situation can boost actions not only in Argentina, but also abroad”he said.
“The high volatility we had in August can be very attractive because it means that companies are borrowing at lower rates. This may generate a rotation of fixed-income assets into variable-income assets because positions in US Treasury bonds are being unwound,” he added.
On the contrary, for Rafael Di Giorno of Profession“the Fed’s rate cut is already fairly priced in because the market is discounting today with an 80% chance that it will cut them by at least 25 points.” Therefore, for this expert, There would be no immediate benefit for Argentine assets, but if In the medium term, he believes that this situation would favor ADRs and bonds.
On this point, he explained that Cycles with high rates in the United States, such as in this case at 5%, mean that investments do not reach emerging countries like ours. “Now if the rate returns to much lower levels, investments will open up, both in the real economy and in investment projects, for example, Foreign Direct Investment or FDI“.
It should be noted that if the month ended today, the S&P Merval accumulated a rise of 6.5% to 1,577,419.84 points, or a 6.4% advance in foreign currency to US$1,227.07. In August, the shares that advanced the most were those of Galicia Financial Group (+15.2%), Pampa Energy (+11.5%), and BBVA Bank (+10.3%).
In fixed income, meanwhile, dollar bonds are on track to end the month in a mixed way: the biggest drop corresponds to the Bonar 2030 (-1.5%), while the largest increase is for the Global 2038 (+2.1%).
Source: Ambito
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