2025-09-26 14:42

Milei party's provincial vote underperformance roiled markets Central bank burnt through more than $1 bln to shore up peso U.S. intervention spurred massive rally in stocks, bonds, peso All eyes on October 26 election, FX measures afterwards LONDON, Sept 26 (Reuters) - Argentina's "whatever it takes" moment with the United States this week may have given the country its best chance to escape decades of chaotic debt defaults and bailouts, investors say. But everything hinges on October's nationwide election. Argentine assets soared after U.S. Treasury Secretary Scott Bessent said "all options" were on the table , opens new tab to stabilize the country and support President Javier Milei, an ideological ally whose chainsaw-style austerity drive has been politically costly - as his September 7 provincial Buenos Aires election drubbing showed. Sign up here. Washington's intervention partially reversed the market nosedive triggered by the underperformance of Milei's party in the provincial vote, a stumble that fanned fears of a broader loss in the October 26 nationwide ballot that could slow or block his reform agenda. "This is an unprecedented support from the United States," said Gustavo Medeiros, head of research at Ashmore Group. Milei's radical reforms since becoming president in December 2023 had helped address the solvency issue Argentina had, Medeiros said, but concerns over a cashflow crunch persisted. "(Argentina) had a liquidity problem until the announcement... Now it doesn't have either," he said. But whether the U.S. pledges augur a lasting change in direction hinges on how Milei's party and its allies perform in October. "It really comes back to the outcome of the elections and whether you have the domestic support to continue the reforms they need," said Joyce Chang, global head of research at JPMorgan. SWAPLINES AND BOND SUPPORT Bessent on Wednesday outlined a package that included a $20 billion swap line, U.S. purchases of Argentina's dollar-denominated bonds in primary and secondary markets, and significant standby credit from the Exchange Stabilization Fund. The infusion of U.S. support is the latest - albeit brightest - glimmer of hope for the Latin American behemoth to change its reputation as a byword for sovereign financial mismanagement. While terms and conditions remain unclear, the might of the U.S. signal alone is helping bridge a tricky period, investors say. "It's more about being forceful with the rhetoric so that the number matters less," said Carmen Altenkirch, emerging markets sovereign analyst with Aviva Investors. Argentina has burned investors with false breakthroughs before. In 2017, investors - lured by faith in then-president Mauricio Macri to implement reforms - snapped up a $2.75 billion century bond. Two years later, he lost power and by 2020 the country had defaulted again. That history has left households and companies with the "muscle memory" to hoard dollars at the first hint of turbulence, Medeiros said, a reflex that can drain reserves and amplify stress. Frayed nerves resurfaced after the provincial Buenos Aires elections. Markets slid, and last week the central bank burned through roughly $1.1 billion of its scarce reserves in just three days to shore up the peso. KEY TEST IN OCTOBER Supporters of Milei's reform push argue that 2025 looks different. They point to fiscal consolidation, cooling inflation and a 2024 fiscal surplus, the first in decades, which together have lured investors back. The promised swap line and potential U.S. dollar inflows are expected to steady the currency - potentially boosting the electoral prospects for Milei's coalition. A suspension of export taxes on key grains hit its goal of boosting dollar inflows ahead of schedule, allowing the government to reimpose the taxes after just two days. If Milei's La Libertad Avanza (LLA) and center-right allies the Propuesta Republicana (PRO) secure at least the expected one-third of seats in the Lower House, the government will likely keep the centre-left opposition at bay and retain leverage to keep reforms moving. "It's hard not to be constructive here," said Thierry Larose, a portfolio manager with Vontobel. "This announcement is a victory that can restore some confidence in the government and help LLA+PRO maintain their lead in the polls ahead of next month's midterms." Citi, keeping its overweight on Argentina through the rally, said "governability risks" would persist, but argued that Milei could continue to push through reforms, with his coalition set to retain the numbers it needs to sustain a presidential veto even under the least favourable outcome. IMF KEEPING UP REFORM PRESSURE Argentina's other key backer, the International Monetary Fund, will also keep up pressure for painful reforms. Argentina's total credit outstanding to the Fund stood at just under $60 billion by late September - nearly four times the amount of its next-biggest debtor, Ukraine. The IMF has a laundry list for Milei including rebuilding foreign exchange reserves, moving towards a more flexible exchange rate, overhauling labour rules and advancing privatizations. The reforms could be painful for a population of 46 million scarred by repeated inflation spikes and currency crises. But any slippage risks triggering yet another market backlash. "It's worth noting that this bailout package is probably the government's last 'Get out of jail free' card," Larose said. "Investors haven't forgotten the fiscal mismanagement of the past." https://www.reuters.com/world/americas/with-us-backing-argentina-gains-time-october-vote-will-be-crucial-2025-09-26/

2025-09-26 13:21

NEW DELHI, Sept 26 (Reuters) - India said on Friday its officials held “constructive” talks with U.S. counterparts during a visit to Washington this week, and both sides agreed to continue discussions aimed at concluding a mutually beneficial trade deal soon. "Both sides exchanged views on possible contours of the deal," the commerce ministry said in a statement. Sign up here. A delegation led by Commerce and Industry Minister Piyush Goyal visited the U.S. from September 22 to 24 and met U.S. Trade Representative Jamieson Greer and ambassador-designate Sergio Gor. Goyal and Greer also joined a meeting between India's Foreign Minister Subrahmanyam Jaishankar and U.S. Secretary of State Marco Rubio on the sidelines of the U.N. General Assembly in New York, India's foreign ministry spokesperson said. "The focus of the discussion was on trade and tariffs. Other aspects of our bilateral relationship were also reviewed," foreign ministry spokesperson Randhir Jaiswal told a regular briefing. A senior government official, speaking on condition of anonymity, said New Delhi is pushing for the removal of the 25% additional tariff imposed by Washington on goods from India for its buying of Russian oil, with both sides aiming to conclude the first part of the deal by autumn. On August 27 President Donald Trump announced a 25% punitive levy on Indian imports, doubling overall tariffs on goods imports from the country to 50%, as part of Washington’s pressure campaign on Moscow over its invasion of Ukraine. "Like many other countries we are expecting a bilateral deal with lower than 25% tariff,” the official said, adding the next round of negotiations would be scheduled soon in either country. “The situation is tough but we are hopeful we will reach an agreement that resolves all issues, including U.S. concerns on Russian oil purchases and our concerns such as H1B visas and pharmaceutical tariffs,” the official added. https://www.reuters.com/sustainability/boards-policy-regulation/india-says-trade-talks-with-us-constructive-eyes-early-deal-2025-09-26/

2025-09-26 13:17

NEW YORK, Sept 26 (Reuters) - The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.3% in August, versus the prior 0.2% rise in July and matched the estimate of economists polled by Reuters. In the 12 months through August, PCE inflation increased 2.7% after climbing 2.6% in July. Stripping out the volatile food and energy components, the so-called core PCE Price Index increased 0.2% last month. That followed a revised 0.2% rise in the core inflation in July. Sign up here. In the 12 months through August, core inflation advanced 2.9% after rising 2.9% in July. The Federal Reserve tracks the PCE price measures for its 2% inflation target. MARKET REACTION: STOCKS: S&P 500 E-mini futures rose and were up 17 points, or 0.26%. BONDS: U.S. Treasury yields slipped and the 10-year yield was last off 0.6 basis point at 4.178% and the two-year yield shed 1.4 basis points to 3.649%. FOREX: The dollar index weakened and was off 0.25% to 98.252. COMMENTS: DOUG BEATH, GLOBAL EQUITY STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, BOSTON "It's a pretty good report, certainly on the consumer spending side, which exceeded expectations. That follows up yesterday's GDP report, the third revision, which indicated higher consumer spending. Then, the inflation numbers, both the headline and the core met expectations. "This should give some reassurances particularly on the inflation side. This is the number one indicator the Fed looks at. "You have higher consumer spending but at the same time the inflation numbers were in line with expectations. Yesterday's stock market volatility in part, was due to stronger economic growth and fears that would lead to less Fed rate cuts going forward, and that's been one of the cornerstones of this significant rally since April 8." GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY. TD SECURITIES, NEW YORK: “Net-net, the data is showing that consumers continue to spend and that the economy may not be slowing quite as quickly as anticipated. The other side of the data, the price levels numbers, came in largely in line with expectations. There's still firmness in the inflationary side, but you saw the year-on-year core remain largely unchanged at 2.9%, as expected, and you saw the headline move up just a little bit to about 2.7%. And we're still expecting some more upside in both of those gauges over the next few months as we continue to see trade disruptions pass through. But I think markets are becoming a little bit more sanguine about inflation pass through, given the extent of the move, and given the fact that the economy's not really falling off a cliff, and I think that's really being viewed as a positive.” PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK: “Bottom line is that inflation remains sticky, but it’s showing no signs of accelerating that would hinder the Fed from at least cutting one more time before year-end. And that's taking into consideration that most of the macroeconomic indicators were a bit stronger than expected, in terms of personal income as well as consumer spending. “It's good news for the markets. We're seeing yields come in a little bit, we're seeing the dollar a little bit lower, but that of course could be due to the new tariffs that were announced by President Trump. “As I said, I think today's inflation news says that will get one more rate cut. Two rate cuts, that’s probably a coin toss now.” KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL PARTNERS, PITTSBURGH: "The big question is if the Fed still going to be overweighted on concern about employment or does it think it needs to, once again, pay more attention to inflation. "I think because the numbers were perhaps a little hotter than anticipated, but not anything outstanding, the Fed is probably still going to look at next week's numbers to see how the labor market's holding up. I think labor markets are more important to the Fed." https://www.reuters.com/business/view-us-pce-matches-expectations-august-2025-09-26/

2025-09-26 13:04

WARSAW, Sept 26 (Reuters) - Poland's economic output has been bolstered by investment from European Union funds that is expected to continue next year, the central bank said on Friday, but added that economic activity was expected to slow into 2026. "Forecasts indicate that GDP growth in the second half of 2025 will remain at a level similar to the first half," the National Bank of Poland said. Sign up here. After that, it said, activity could slow and that a major uncertainty was "the further course of Russian armed aggression against Ukraine". Weak foreign demand due to stagnation in Germany had limited Polish economic growth, and the contribution of net exports to GDP was negative in the first half of 2025. The bank said downside risks depended on the extent to which European Union funds continued to be used and the demand outlook. It also said that forecasts showed annual average consumer price inflation, as well as core inflation, would fall next year. Saying fiscal policy was the main tool to mitigate the impact of any shocks on the economy, the central bank said the shape of 2026 fiscal policy was a significant uncertainty. https://www.reuters.com/business/finance/eu-funds-bolster-polands-economy-export-market-weighs-central-bank-says-2025-09-26/

2025-09-26 12:32

July GDP grows by 0.2% led by goods-producing industries August GDP likely to be flat but avoid a contraction GDP figures signals Canada might avoid a recession Biggest drivers of July growth were mining, manufacturing OTTAWA, Sept 26 (Reuters) - Canada's monthly gross domestic product rebounded from three months of contraction to grow by 0.2% in July as mining, manufacturing and wholesale trade boosted growth, data showed on Friday. Canada's GDP had shrunk in the second quarter by 1.6% annualized and economists were closely tracking the July GDP growth figure to get an indication of whether there will be a contraction in the third quarter. Sign up here. Two consecutive quarters of contraction are considered a technical recession. A preliminary estimate showed August would most likely see no growth but avoid a contraction, Statistics Canada said, as increases in services-producing industries were likely to be offset by goods-producing sectors. The advance estimate is not always accurate and could change. Analysts polled by Reuters had forecast a GDP growth of 0.1% in July from a 0.1% contraction in June. "Through the monthly volatility, Q3 GDP is tracking a 0.8% annualized rate, which is better than where it was tracking before today's release," Andrew Grantham, senior economist at CIBC Capital Markets wrote in a note. TARIFFS HIT CANADA'S ECONOMY Canada's economic growth was hobbled in the last few months after a strong start this year as a barrage of tariffs from the U.S. hit critical sectors of the economy , opens new tab. The Bank of Canada has said that trade disruptions and tariffs have significantly hit key sectors forcing business investments down, and there were chances that the malaise might spill over to other sectors in the coming months. The growth in July was primarily driven by goods-producing industries which contribute roughly a quarter to the monthly GDP. This sector grew by 0.6% for the first time in four months. The biggest contribution to growth came from mining, quarrying and oil and gas extraction which registered a bump in growth of 1.4%. The manufacturing sector, which is heavily exposed to U.S. tariffs and contributes up to a tenth of GDP, grew by 0.7%, registering the second-fastest growth. The services-producing sector, which accounts for three quarters of the monthly GDP, was less impressive with a growth of 0.1%, helped by wholesale trade and transportation and warehousing, both of which grew by 0.6%. The growth in transportation and warehousing sector, which had contracted by 0.7% in the prior month, was driven by a 2.8% increase in pipeline transportation, marking its largest growth since September 2022, StatsCan said. Real estate and rental and leasing grew by 0.3% in July, posting a new record high for the second month in a row, it said, adding that the growth in July was driven by higher activity at the offices of real estate agents and brokers. The biggest drop was seen in retail trade which shrank by 1% in July after solid growth in the prior month. The BoC has said that if the risks to the economy increase further, it will be ready to cut rates again after it resumed rate reduction last week with a cut of 25 basis points in its benchmark rate to 2.5%. Money markets view the October rates decision as a coin toss with traders split on whether the bank would cut by 25 basis points or hold. Grantham said the next jobs data and inflation numbers would be crucial in ascertaining whether there could be another rate cut on Oct. 29. The Canadian dollar strengthened after the GDP data and was trading at 1.3936 to the U.S. dollar, or 71.76 U.S. cents. Yields on the two-year government bonds were down 0.9 basis points to 2.486%. https://www.reuters.com/world/americas/canadas-gdp-rebounds-july-after-three-months-contraction-2025-09-26/

2025-09-26 11:56

LISBON, Sept 26 (Reuters) - Cyclone Gabrielle hit Portugal's mid-Atlantic Azores Islands on Friday with less intense winds and rains than expected, but still toppled trees and collapsed roofs, authorities said. The meteorological agency IPMA had placed the islands on red alert for a weather event carrying extreme risk. Sign up here. The Azores' regional environment secretary, Alonso Miguel, said restrictions including a closure of schools and public services and a ban on coastal activities remained in place for now. "Fortunately, there are no injuries to report; most incidents are related to falling trees, infrastructure damage, and roof collapses," he told reporters. He said the wind and rain were expected to ease as the storm, which crossed seven of the Azores' nine islands, moved east. The archipelago lies about 1,500 km (930 miles) west of the Portuguese mainland and is home to nearly 250,000 people. Miguel said the maximum wind gust at ground level had been 154 kph (96 mph), below the predicted maximum of 200 kph (125 mph). Maximum sea swells were also well below the 18 metres (59 feet) forecast by the IPMA, he said. https://www.reuters.com/business/environment/cyclone-gabrielle-hits-azores-less-fiercely-than-expected-2025-09-26/