Aurelia Butler

The Labor Department reported a 0.6% month-over-month increase in the consumer price index (CPI) for August, marking the largest monthly gain in 14 months. When compared to the same month last year, inflation rose by 3.7%.Core CPI, which excludes volatile food and energy costs, also saw an uptick of 0.3% last month. This marked a notable increase from the 0.2% rise observed in the two preceding months. The annual core CPI rate also jumped to 4.3%.Several factors contributed to this inflationary trend. The cost of gasoline, food, and shelter all increased in August. Airfares witnessed almost a 5% rise last month after four consecutive months of decline, contributing significantly to the overall inflation figure. Additionally, prices for trucks, cars, auto insurance, and home furnishings also saw increases during the same period.Oil prices have been on an upward trajectory recently due to expectations of robust demand and tighter supply conditions. The Organization of the Petroleum Exporting Countries (OPEC) has projected that global oil demand will rise by 2.25 million barrels per day next year.This spike in oil prices has led to increased transportation costs which have subsequently pushed up the price of essential goods. Despite these challenges, REITs like Invitation Home, American Homes 4 Rent, and Centerspace continue to attract investors looking for a shield against inflation.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

LONDON (Reuters) -Argentina and the International Monetary Fund share a rocky history spanning seven decades – and it looks as if things could get worse.Just five years ago, Argentina became the Washington-based global lender’s biggest single debtor, receiving a $57 billion bailout to help then-President Mauricio Macri’s market-friendly government steer out of an economic crisis marked by high inflation and a gaping budget deficit. But that programme failed to put South America’s second-largest economy back on its feet.Fast forward and Argentina is about to enter a recession, with inflation running at more than 100% and its dollar reserves deep in the red. Meanwhile, the Peronist-led government that took over in late 2019 has missed the modest economic targets mandated by a 2022 IMF loan tailored to refinance $44 billion still owed from the previous programme. Although the current programme is off track, the IMF is pushing ahead with reviews and disbursements because it does not want to force Argentina into a default that would likely worsen the country’s grim economic circumstances.Pressure, however, is building inside and outside the IMF to ensure Argentina’s treatment is in line with those of other countries. Analysts said the IMF needs to take a harder stance when a new government takes power after elections in October.”No matter who wins after the vote, the IMF should insist that the government either bite the bullet – or otherwise the Fund should pull the plug on its support,” said Mark Sobel, a former U.S. representative at the IMF. “Even if that means huge arrears.”NEW GOVERNMENT AHEADThe next government might feel the heat quickly. Javier Milei, a far-right outsider who vaulted into the front-runner’s position after primary elections last month, wants to dollarise the economy and said the Fund should encourage Argentina to more quickly reduce its primary fiscal deficit, which is targeted at 1.9% of gross domestic product for 2023. Even if he wins the Oct. 22 election and takes power in December, Milei would need alliances in Congress to push through reforms and a new IMF programme – Argentina’s 23rd.Sobel said the country will require sweeping fiscal consolidation, a halt on reserve money creation, and an extensive and sequenced liberalisation of multiple foreign exchange rates, capital controls and other restrictions.Economy Minister Sergio Massa, the center-left Peronist coalition’s presidential candidate, promised this week to exempt millions of workers from paying income taxes shortly after a fresh IMF disbursement. Stricter conditions and deeper structural reforms for Buenos Aires should come with a “very strong social component,” said Martin Muehleisen, the former director of the IMF’s Strategy, Policy and Review Department (SPR), adding that a new programme “can’t mean more people living on the streets.” Four out of 10 Argentines live below the poverty line.”The message to Argentina from the IMF but also from G7 shareholders needs to be clear: You fix your economy for real or there is just not more money,” Muehleisen said. A top soybean meal and oil exporter, Argentina is at the mercy of boom-and-bust cycles. Its economic policies have gyrated between protectionism – capital controls, export quotas and tariffs – and market-friendly reforms, leading to a topsy-turvy relationship with the Fund.In the 1990s, the global lender was a continuous feature in Argentina, providing financing and technical assistance while the government fixed the peso to the U.S. dollar. But quick IMF disengagement in 2001 worsened an economic crisis as the country’s overseas debt bulged. The rise of leftist Nestor Kirchner to the presidency in 2003 opened a new chapter, as his government took a hostile view of the IMF and repaid some $10 billion owed to the Fund before cutting ties.Following 15 years with no programmes, Argentina returned to the IMF in 2018 to request a record bailout. That effort paved the way for the $57 billion programme, which ultimately failed and was replaced by the current one.”The shadow of that failed programme will linger on both the new administration and the IMF, as there is an institutional memory on how this programme didn’t help”, said Stephen Nelson, an associate professor of political science at Northwestern (NASDAQ:NWE) University in Chicago. PREFERENTIAL TREATMENTThe current programme could end before its expiration in September 2024, but Argentina will still require funds. “Argentina needs a big liquidity boost. The pressure from IMF members to tighten conditions will get amplified when negotiations turn to a new lending arrangement,” said Nelson, who specializes in the politics shaping IMF lending policies.Dollar-strapped Argentina maintains a complicated currency scheme of multiple rates that worsened after a recent 18% devaluation. Capital controls are still in place.Some IMF executive board members have complained in Argentina-related meetings that the country has received preferential treatment, three sources close to the matter said on condition of anonymity.The lack of “evenhandedness” has come up with countries such as Zambia, Sri Lanka and Ghana facing strict requirements under IMF-led debt reworks. “How can the worst serial defaulter in the emerging markets asset class continue to receive preferential treatment compared to other EM nations with macroeconomic troubles?” said Walter Stoeppelwerth, chief strategist at financial firm Gletir SA. Economists have pointed to Egypt and Burundi, which devalued their currencies by more than 40% and more than 30%, respectively, as examples of countries that have had to take harsh medicine under IMF programmes.Simon Quijano-Evans, chief economist at asset manager Gemcorp Capital, noted that Argentina has more outstanding IMF debt than the $38 billion combined from sub-Saharan Africa nations at a time when many of the latter face “debt restructuring delays due to the G20 Common Framework process.”Without mentioning Argentina, the U.S. – holding the largest voting power in the Fund – recently raised its concerns. “In some cases, a country will require a follow-on program to resolve its balance of payments problems,” said Jay Shambaugh, the U.S. Treasury’s undersecretary for international affairs. “But it cannot be the policy of the IMF to roll over programs, or approve reviews, only to avoid arrears without sound policy reforms in place.” More

SANTIAGO DE COMPOSTELA, Spain (Reuters) -Euro zone finance ministers agreed on Friday that fiscal policy should be restrictive next year to help the European Central Bank curb inflation, while balancing the need for investment.Ministers in charge of public finances in the 20 euro zone countries met in the Spanish city of Santiago de Compostela to discuss the European Commission’s latest economic forecasts that sharply revised down 2023 and 2024 economic growth forecasts.Meanwhile, inflation is set to stay well above the ECB’s 2% target, forcing it to raise interest rates to reduce demand.”It is clear that the euro area economy has lost some growth momentum as a number of past shocks and, of course, recent policy decisions are feeding through,” the chairman of the meeting Paschal Donohoe told a news conference.”Fiscal policy should be prudent, it should be careful, it should pursue a restrictive stance and it needs to work in alignment with changes that have been made at the level of monetary policy,” he said. The meeting is timely because all euro zone countries have submitted draft budgets for 2024 to the EU executive to check if they are compatible with EU rules, which are now under review.European Economic Commissioner Paolo Gentiloni said supporting the ECB’s efforts to tame inflation was one of the key policy messages of the meeting.”To do so, fiscal policy needs to be restrictive as we recommend in the spring. This does not mean cutting back on investment, but it does mean in particular phasing out remaining energy support measures and ensuring that any new measures, should they prove necessary, are much better targeted,” he said.French Finance Minister Bruno le Maire stressed France was committed to sound public finances and the reduction of debt, but that Europe also needed faster growth.”We should devote all our time and energy to think about measures we need to take to have more growth in Europe. It means … we need a sound balance between sound public finances and lower debt and innovation, investment and fighting against climate change,” he said. More

Punchbowl News on Friday said Zelenskiy’s visit with Congress was tentatively scheduled for Thursday. The Washington Post also reported Zelenskiy was set to travel to the U.S. Congress on Thursday, while the Wall Street Journal said he would meet with U.S. lawmakers.Representatives for Zelenskiy and congressional leaders could not be immediately reached for comment on the reports. Zelenskiy is expected to head to Washington next week following his trip to New York for the U.N. General Assembly meeting, the U.S. official told Reuters on Thursday. His visit comes as Biden, a Democrat, presses U.S. lawmakers to provide an additional $24 billion for Ukraine and other international needs amid Russia’s ongoing invasion. Any funds must be approved by Congress. Biden’s fellow Democrats control the U.S. Senate, but Republicans narrowly control the U.S. House of Representatives and have signaled resistance to the additional funding request for Ukraine. More

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SANTIAGO DE COMPOSTELA, Spain (Reuters) -The European Central Bank will keep interest rates high for an extended period and could even raise them again if needed, policymakers said on Friday, pushing back on some market bets that euro zone rates will start falling as soon as next spring.The ECB raised its key interest rate to a record high of 4% on Thursday but, with the euro zone economy in the doldrums, signalled that its 10th straight hike was likely to be its last. That prompted traders to ramp up speculation on when it will begin lowering borrowing costs. ECB President Christine Lagarde said the prospect of a future rate cut had not even been mentioned by policymakers during their deliberations this week. “We have not decided, discussed or even pronounced cuts,” Lagarde told a press conference on Friday. “We will be data-dependent and as I said, level and length of time will matter significantly.”Lagarde said rates will be kept high for “long enough” to get inflation back to the ECB’s 2% target and there is no calendar attached to this process as decisions will be made meeting-by-meeting, depending on incoming data.ECB Vice President Luis de Guindos said market expectations are just bets, which could easily turn out to be wrong, as policymakers will focus on data.”Markets can also be wrong; they are based on a series of hypotheses that sometimes do not come true, that we will start to lower rates in June ’24,” de Guindos told Spanish radio station Cadena Cope. “It is a bet, it may be right and it may not be right,” De Guindos added.Latvia’s central bank governor meanwhile dismissed the notion, popularised by market pundits, that Thursday’s move was a “dovish hike” and said policy could still be tightened again if needed. “I’m comfortable with the current level of rates and I think we’re on track to reach 2% in the second half of 2025,” Martins Kazaks told Reuters on the sidelines of a meeting of European Union financial policymakers in Santiago de Compostela, Spain.”But if the data tells us that we need another hike, we’ll do it.”RESTRICTIVE TERRITORYThe ECB said on Thursday it considers interest rates “have reached levels that, maintained for a sufficiently long duration” would help bring inflation back to target. Lithuanian policymaker Gediminas Simkus said he hoped the ECB was done raising rates.”I want to hope this is the last dose of medicine – the (last) raise of 25 basis points.”German finance minister Christian Lindner said the ECB’s decision to raise rates was “understandable” and that it was his government’s job to support the central bank by pursuing a “a moderately restrictive fiscal policy”.Money markets are now pricing in a slight chance of a rate cut by the ECB as early as April and fully expect a 25-basis-point reduction by July.”Markets have to take a position but (an April rate cut) is inconsistent with our macro scenario,” Kazaks said. “We’ve clearly said we’ll stay in restrictive territory for as long as necessary to get inflation to 2%.”Before rates can be cut, the ECB will have to make a decision on hoovering up some of the cash it pumped into the banking system over a decade in which inflation was too low, through a number of bond-buying programmes.”There is excess liquidity that has to be removed and we’ll have to discuss it,” Kazaks added said. “It has to happen before rates are cut.” More

According to LSEG data, investors channelled approximately $9.95 billion into global equity funds, marking the most substantial net weekly acquisition since June 14.Breaking it down regionally, U.S. and Asian equity funds had inflows of roughly $9.7 billion and $1.62 billion, respectively. However, European funds were hit with outflows, shedding $662 million.By sector, consumer discretionary funds saw an influx of about $867 million and tech sector funds garnered around $474 million. Other sector-focused fund remained out of favour.Last month’s U.S. consumer prices saw their steepest rise in 14 months due to escalating gasoline costs, yet the year-on-year core inflation increase was the smallest in almost two years, which could potentially provide some leeway for the Federal Reserve to keep interest rates unchanged at its upcoming Wednesday meeting.Contrastingly, the allure of global money market funds appeared to wane. They registered a net intake of $10.65 billion, a sharp decline from the $60.5 billion in the preceding week.Global bond funds recorded $531 million in outflows, a reversal from the inflows seen over the past three weeks. High-yield funds reported around $899 million in outflows, breaking their two-week buying streak. But both corporate and government bond funds observed inflows, netting $1.09 billion and $831 million, respectively.Among commodities, precious metal funds continued their selling trend into a 16th week with $454 million in outflows. Energy funds also experienced a dip, registering $128 million in outflows, marking a shift from the previous two weeks of net purchases.Data covering 28,218 emerging market funds highlighted a net exit of $1.95 billion from equity funds. Bond funds in these markets also faced headwinds, with a disposal of approximately $795 million, marking their seventh consecutive week of net selling. More