More changes to policy

Daily update

There are reports that the US administration will extend the delay in implementing tariffs on car part imports from two years to five years. This is a reaction to intensive domestic lobbying, and should probably not be taken as a signal for the wider trade tensions between the US and China.
Financial markets seem to have been exhibiting some concerns about credit risk. However, credit has not been a limiting factor for growth, and middle-income households still have strong balance sheets with low debt levels. The language of Federal Reserve speakers is still focused on cutting rates. Credit concerns should not necessarily be dismissed, but need to be set in a proper context.
The Eurozone is offering final September consumer inflation data. Markets are likely to exhibit supreme indifference, as nothing interesting ever happens with final Eurozone consumer inflation data. There are some ECB speakers, but this too is treated as background noise.
Argentinian locals seem to be keen to sell their pesos and receive some of US Treasury Secretary Bessent’s USD 20bn of US taxpayers’ money in exchange. The peso and Argentinian bonds remain pressured. If investors believe a currency is fundamentally mispriced, intervention only buys time in which to attempt to change the fundamentals.