- LatAm FX down 0.3%, stocks off 0.4%
- Argentine markets steady after Bessent support comments
- Consumer prices in Sao Paulo climbed in September
- Peruvian stocks hit an intraday record high
MSCI’s index for Latin American currencies .MILA00000CUS slipped 0.3% and was on pace to snap its four-day streak of gains, while the dollar remained steady despite pressures from partial government closure.
Speculation was rife about the length of the shutdown, its effect on economic data releases and the Fed’s future policy actions.
The shutdown postponed the September jobs report, leaving investors to rely on Wednesday’s ADP National Employment Report, which showed weakness in private payrolls and reinforced hopes for at least two more rate cuts later this year.
BESSENT CONFIRMS PLANS FOR CREDIT SWAP LINE
In Latin America, Argentine markets stabilized after U.S. Treasury Secretary Scott Bessent confirmed plans to provide a credit swap line, signaling Washington’s intent to maintain strategic interests in the country.
The local peso ARS=RASL steadied after declining for three consecutive sessions that reflected growing skepticism over U.S. support for President Javier Milei and a potential $20 billion swap line for Argentina’s central bank.
“Investors are kind of split because it is still a really good thing that Trump and Milei get along, but the other thing is the domestic ability of Milei to be able to do anything, even if he’s given some sort of line of credit,” said Juan Perez, director of trading at Monex.
“And then when you do the analysis, it just may not seem enough as there may not be a direct impact on the real economy.”
The South American nation has been the epicenter of market unrest lately, with assets swinging in both directions in the run-up to the upcoming mid-term legislative elections, where Milei’s party will aim to gain seats to strengthen its minority position following a debilitating setback in last month’s provincial elections.
A Reuters poll showed on Wednesday that the currency is likely to weaken following the October 26 vote, but without suffering another big devaluation.
Argentina’s international dollar bonds also steadied, while the local stock index .MERV gained 0.16% after two sessions of losses.
Milei, who is expected to meet U.S. President Donald Trump on October 14, said on Wednesday that proposed U.S. financial support could include purchases of Argentine debt in the secondary market and a profit-sharing arrangement.
REAL SUBDUED
In Brazil, the currency real BRL= and the main stock index .BVSP were subdued. Consumer prices in Sao Paulo, Brazil’s most populous city, climbed 0.65% in September, from an increase of 0.04% in August.
A broader gauge for Latin American stocks .MILA00000PUS extended losses to fall about 0.3%.
Mexican stocks .MXX slipped 0.1% and the currency MXN= declined 0.4%, partly dragged down by falling oil prices. The country, being the second-largest oil exporter from Latin America, generates significant income from the commodity.
On Wednesday, private sector analysts polled by Mexico’s central bank upped the country’s 2025 growth forecasts for the fourth consecutive time, while also raising inflation projections.
Chile’s peso CLP= fell 0.3%, while the country’s main stock index .SPIPSA remained flat. Peruvian stocks .MXNUAMPESCPGPE jumped 0.47% after briefly hitting an all-time high.
