The 20-year Treasury bond, a laggard on the government debt curve since its re-introduction in 2020, topped 5% Wednesday for the first time since 2023. The move looks to be fueled by concern that President-elect Donald Trump’s policies on tariffs and tax cuts will lead to wider deficits and rekindle inflation.
The Institute for Supply Management’s index of services advanced 2 points to 54.1 last month. That show of strength in the economy–readings above 50 indicate expansion–was enough to push stocks lower as the markets began to price in a delay in the next interest rate cut from the Federal Reserve until July The measure of prices paid for materials and services rose more than 6 points to 64.4, suggesting that the drop in the inflation rate in the service sector–about 70% of the U.S. economy–might be over.
It feels like panic rather than a plan. Because, I think, it is panic without a plan. The central bank of Argentina raised its benchmark interest rate another 3 percentage points today (that’s not 3 or 30 basis points but 300–a full 3 percentage points.) This comes after the central bank raised interest rates 3 percentage points last Friday. The benchmark rate now stands at 33.25%, the highest in the world
Yesterday Moody’s Investors Service raised Argentina’s credit rating one level to B2 from B3. I added Grupo Financiero Galicia (GGAL) and Global X MSCI Argentina ETF (ARGT) to my Volatility Portfolio on my expectation that President Mauricio Macri’s macroeconomic reforms would gradually revive the economy and lead to upgrades in the country’s credit rating (and a drop in runaway inflation.)  The two picks are up 69.12% and 7.29%, respectively, since I added them to this portfolio. Argentina is on track, Moody’s said in its upgrade, to turn in two years of economic growth in a row in 2017 and 2108, which would be the first time that’s happened since 2011. Moody’s projects that the Argentine economy will grow by 3% this year and 3.5% in 2018.
