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Argentina reaches deal with bondholders amidst idiosyncratic TRY volatility

Weekly investor research

10 August 2020

Argentina reached a deal with the main bondholder groups. Turkish Lira (TRY) weakness temporarily weighed on other EM high yield currencies, but lasting contagion is unlikely as the factors driving TRY weakness are idiosyncratic. US anti-China policies may help to deepen trust in China. Brazil’s central bank cut the policy rate to 2.0% as Congress discusses tax reform. Mexico’s fiscal accounts remained resilient despite economic weakness. India left the policy rate unchanged. The Chilean parliament approved a constitutional amendment that allows the central bank to buy bonds. Peru’s congress undermines President Martin Vizcarra’s reform agenda. A tragic event in Lebanon highlighted the urgency of governance reform. The party of President Rajapaksa won a landslide victory in Sri Lanka’s parliamentary election. In the US, President Donald Trump’s executive order to extend unemployment payments was labelled unconstitutional by Democrats as political tensions rise ahead of the November presidential election.

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