Aurelia Butler

The package, which director-general Ngozi Okonjo-Iweala described as “unprecedented”, did not include two of the most important deals under consideration: fisheries and a partial waiver for intellectual property rights for COVID-19 drugs.However, delegates said they may be added later, with negotiations ongoing at the WTO’s Geneva headquarters ahead of a final meeting scheduled for 0100 GMT on Friday.This week’s meeting with over 100 trade ministers is the body’s first such conference in over four years and is seen as a crucial test of its ability to strike multilateral trade deals amid high geopolitical tensions. It has already landed one, on maintaining a moratorium on e-commerce tariffs. [L1N2Y30KU]In the letter presenting the documents, signed by Okonjo-Iweala and two WTO chairs, she asked members to consider the “delicate balance” achieved over five days of nearly round-the-clock talks that have been at times been charged with anger and frustration. “The nature of compromise is that noone gets all of what they want,” the letter said. “Let us complete our work tonight so we can honor those out there waiting for the WTO to deliver.”Under WTO practices, its 164 members all have to agree by consensus and a blockage on one topic can derail other negotiations. More

Investors yanked billions of dollars out of corporate bond funds over the past week as unexpectedly high inflation data prompted an aggressive interest rate increase by the Federal Reserve, intensifying fears over a global economic downturn. For the week to June 15, $6.6bn was withdrawn from funds that buy lower-quality, US high-yield bonds, making it the most bruising week for fund managers since the worst of the coronavirus pandemic sell-off in March 2020 and taking year-to-date outflows to nearly $35bn, according to financial data provider EPFR.Outflows for funds that buy US investment-grade bonds reached $2.1bn, the largest one-week total since April 2021. Surprisingly high inflation data late last week prompted fund managers to re-evaluate previous assumptions that the rapid rise in prices had started to abate. It also raised expectations of aggressive monetary policy tightening by the Fed, which some investors fear could stamp out US growth and send the economy into recession. Fed chair Jay Powell reiterated the central bank’s commitment to tackling inflation at its meeting this week, while also acknowledging that some of the drivers — like soaring commodity prices stemming from war in Europe — were outside its control. “Banks led us into the [2008] financial crisis. I think central banks will lead us into this one,” said John McClain, a portfolio manager at Brandywine Investment Management. “Central banks don’t have the antidote for this market. Hiking rates will slow the economy, but it won’t stop war in Ukraine and it wont alleviate supply chains.”When interest rates are higher, prices for existing fixed-rate corporate bonds decline in order to make up for the lower interest rates investors earn on them compared to new debt. But there are growing concerns that a looming economic downturn could test companies’ ability to repay their debts, sending prices — which move in the opposite direction of bond yields — even lower this week. The yield on higher-quality, investment-grade bonds surpassed levels from the depths of the pandemic in March 2020 and came within a whisker of crossing 5 per cent, a level last seen in the aftermath of the global financial crisis in 2009, according to an index run by Ice Data Services. The additional yield above Treasuries on lower-quality “junk” bonds — which indicates the level of risk of lending to a private company versus the US government — has already risen 0.66 percentage points this week to 5.17 percentage points, putting the reassessment of credit risk on course for its biggest move in a single week since March 2020. 

Roughly $100bn of junk debt now trades with a spread of more than 10 percentage points above Treasuries, a commonly used definition of distress and a sign of how risky it is to lend to those companies, according to a $1.45tn index run by Ice Data Services. Fed officials “only have one way of killing inflation and that is the very grisly and bloody tool of crushing demand, crushing the housing industry, crushing investment [and] crushing exports”, said David Kelly, chief global strategist at JPMorgan Asset Management. “That’s the only way they can do it.” More

BUENOS AIRES (Reuters) -Argentina’s central bank raised its benchmark interest rate by the most in three years on Thursday, hot on the heels of a major hike by the U.S. Federal Reserve and as the South American country firefights sky-high inflation running at over 60%.The central bank upped the benchmark Leliq rate by 300 basis points to 52%, the sharpest rise since 2019, citing rising perception of financial risk, soaring global prices and the need to spur saving in the hard-hit local peso currency.The move by Argentina, which suffers one of the highest levels of inflation globally, comes as central banks around Europe and in giant neighbor Brazil have hiked rates in recent days to counter rising prices.”The rise in rates acts mainly by encouraging savings in pesos,” the central bank said, adding it would continue to calibrate monetary policy with an eye on inflation.Fueled initially by soaring oil prices in the wake of Russia’s invasion of Ukraine, global inflation has broadened out to everything from food to services with double digit readings in some countries around the world.Argentina, a major grains exporter which is trying to rebuild depleted foreign currency reserves, saw prices rise 5.1% in May alone and many anticipate annual inflation hitting above 70% this year, a major drag on savings and salaries.Government sources on Thursday said they expected inflation for the year to come in between 52% and 62%, which would be well below analyst forecasts but above targets agreed with the International Monetary Fund (IMF) as part of a recent deal.The central bank said it expected monthly inflation to “continue to decline gradually” after hitting a peak in March.Analysts said the sharp hike was a sign of the bank’s desperation to rein in inflation and ensure investors didn’t pull out of peso-denominated securities.”It feels like the central bank is playing catch in this fight,” said Christian Viand, a managing partner at settlements and clearing agent Criteria in Buenos Aires.Mariano Sardáns, chief executive of FDI Wealth Manager, said the hike was unlikely to tame inflation because confidence in the peso was already shot and few believed prices could be brought under control after years of high inflation.”What exists is full distrust,” he said.Argentina is a major exporter of soy, corn and wheat, which has increasingly come into focus amid a global supply crunch. It is also the largest debtor to the IMF, securing a new $44 billion deal earlier this year.^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Argentina: rate hikes https://tmsnrt.rs/3LENjXrArgentina: rate hikes (Interactive graphic) https://tmsnrt.rs/3oThh0g^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ > More