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The Federal Reserve Cuts Key Benchmark Interest Rates

Written by IntaCapital Swiss on November 4, 2025. Posted in News & Reports. Leave a Comment

On Wednesday, 29^th October, the Federal Reserve’s FOMC (Federal Open Market Committee), for the second time in 2025, and in consecutive months, reduced interest rates by 25 basis points to 3.75% – 4.00%, marking the lowest level in three years. The vote to cut rates was 10 – 2 in favour, with two dissenting voices opposing the decision: Stephen Miran and the President of the Federal Reserve Bank of Kansas City, Jeffrey Schmid.

It appears that the Federal Reserve is divided into two camps, with the dissenters concerned about inflation, while the majority are focused on the job market. Two non-voting members of the FOMC, Lorie Logan, President of the Federal Reserve Bank of Dallas, and Beth Hammack, President of the Federal Reserve Bank of Cleveland, who will rotate into voting positions in 2026, both indicated they would have preferred to hold rates steady this time.

Remarks made by the aforementioned Federal Reserve Bank Chairs suggest that, moving forward, there will be a lively debate over the next six weeks ahead of the next FOMC policy meeting on 9th – 10^th December. It is shaping up to be a direct contest between those concerned about persistent inflation and those prioritising support for the labour market. Dallas Fed chair Logan remarked, “I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labour market will cool more rapidly.”

At a press conference following the rate cut, Federal Reserve Chairman Jerome Powell advised that another reduction at the next policy meeting in December “is not a foregone conclusion”. The Chairman added, “There were strongly differing views on how to proceed in December during the meeting today and we have not made a decision about December”. Therefore, no decision has yet been made regarding future rate cuts, with Powell emphasising that any such move should not be seen as inevitable.

The Federal Reserve has a so-called dual mandate requiring policymakers to maintain both low unemployment and low inflation. Chairman Powell noted in October that risks to the labour market are increasing, though experts have advised that the ongoing government shutdown has resulted in a lack of economic data, a factor that may be hampering FOMC decision-making. One analyst commented, “A prolonged government shutdown and on-going tariff negotiations continue to introduce significant uncertainty into the immediate monetary policy outlook”.

Experts suggest that the Federal Reserve’s hands are somewhat limited due to the near blackout on economic data. However, the government did unexpectedly release the September 2025 CPI (Consumer Price Index) figures on 24^th October, which showed a 3% annual increase and 0.3% monthly increase, both lower than anticipated. The FOMC remains committed to both sides of its dual mandate, and with economic uncertainty still elevated, has seemingly opted to prioritise employment for now. Inflation, however, remains above target, and if next month’s data (assuming the government shutdown ends) shows an uptick in inflation, it could see renewed tension between the labour market and inflation factions within the FOMC.

Russia Hit with New Oil Sanctions

Written by IntaCapital Swiss on October 29, 2025. Posted in News & Reports. Leave a Comment

Last week on 22^nd of October, in Washington D.C, the U.S. Department of the Treasury’s Office of Foreign Asset Control (OFAC) announced that further sanctions on major Russian oil companies were being imposed due to Russia’s lack of serious commitment to a peace process to end the war in Ukraine. Experts advise that the aim of this increased pressure on Russia’s energy sector is to weaken President Putin’s ability to generate revenue for the war effort and to sustain an already fragile economy.

The sanctioning of both Rosneft and Lukoil* by the United States coincided with the EU’s 19^th package of sanctions on Russia, which included a ban on Russian LNG (liquefied natural gas) imports. The United Kingdom had also added to its own sanctions list the previous week.

Rosneft – A vertically integrated energy company specialising in the exploration, production, refining, transportation, and sale of petroleum, petroleum products, and LNG. The Russian Government owns around 40.4% of the company, with the Qatar Investment Authority also holding a significant stake.

Lukoil – Engaged in the exploration, production, refining, marketing, and distribution of oil and gas across Russian and international markets. Lukoil is privately owned, with its founder, Vagit Alekperov, holding approximately 28.3%.

President Trump’s sanction package targeting Rosneft and Lukoil has triggered repercussions in the world’s two most populated nations, India and China. Experts report that a number of oil companies in both countries have begun cancelling orders ahead of the sanction deadline of 21^st November 2025, fearing potential retaliation from the White House for sanction busting. Analysts estimate that Russia exports between 3.5 and 4.5 million barrels of oil per day to Asia, with a significant portion coming from the newly sanctioned firms. However, experts warn that once the deadline passes, exports of between 1.4 and 2.6 million barrels per day to China and India could completely dry up.

Under OFAC’s latest rules, U.S. secondary sanctions may also be imposed for providing material support to Lukoil or Rosneft, or for operating within Russia’s energy sector. In essence, sanctions can be triggered by any significant transaction involving these companies. The threat of being banned from the U.S. financial system is expected to deter potential sanction busters from engaging in new or existing business with either firm.

The EU’s new sanctions package will prohibit the import or transfer, directly or indirectly, of Russian LNG from 25th April 2026, except for long-term contracts entered into before 17th June 2025. The EU’s implementation has been slower than that of the U.S. and UK due to its greater dependence on Russian LNG.

Meanwhile, both the European Union and the United Kingdom continue to target vessels operating within the so-called shadow fleet*, which is used to transport Russian oil and bypass Western sanctions. The UK has also imposed asset freezes on several companies supplying Russia with critical electronics for missiles and drones. Additionally, the EU has identified 45 new companies and entities that are directly supporting Russia’s war effort by helping to circumvent export restrictions on advanced technology.

Shadow Fleet – A collection of around 45 ageing, uninsured oil tankers used by Russia to export oil while evading Western sanctions. These vessels typically have opaque ownership structures, often sail under false flags, and operate outside the Western financial system. This enables Russia to sell oil below the Western-imposed price cap of USD 60 per barrel, designed to limit Moscow’s export revenues.

The latest round of sanctions is expected to result in increased enforcement activity and greater regulatory scrutiny, particularly if the United States maintains its renewed aggressiveness. With relatively short wind-down periods for both Lukoil and Rosneft, sanctioning authorities will need to act swiftly and with heightened diligence. Strong cross-border coordination among multinational organisations will be essential to ensure a robust and effective sanctions compliance framework.

President Trump and the Tariff Trade Wars

Written by IntaCapital Swiss on October 29, 2025. Posted in News & Reports. Leave a Comment

On Thursday, 23rd October, President Donald Trump announced that he was halting all trade negotiations with Canada, blaming an advertisement funded by the Ontario Government, which cast negative connotations on his tariff plans by featuring the voice of former President Ronald Reagan. The advert used excerpts from a 1987 speech in which President Reagan criticised tariffs as outdated while defending the principles of free trade. Last year, the United States and Canada exchanged in excess of USD 900 billion in goods and services, and the cancellation of trade talks by President Trump has cast a cloud of uncertainty over bilateral trade relations between the two nations.

President Trump’s announcement, made via his Truth social media stated:

“Tariffs are very important to the National Security and economy of the U.S.A. Based on their egregious behaviour, all trade negotiations with Canada are hereby terminated”.

Experts suggest that the President is convinced the Ontario Government timed the adverts (which have been shown more than once) to coincide with a case in the Supreme Court challenging the legality of the tariffs, and to sow discord among Republican supporters. Canada’s Prime Minister, Mark Carney announced on Friday that the country was ready to resume trade talks with the United States and would pause the advert on Monday in the hope that U.S. trade officials would return to the negotiating table.

In a surprise move, President Trump predicted that Brazil and the United States may be able to “pretty quickly” strike a trade deal, despite having imposed punitive tariffs on Brazil earlier this year over the prosecution of former ally Jair Bolsonaro. Brazilian Foreign Affairs Minister Mauro Vieira stated that he hoped sanctions on Brazilian officials would be lifted and that he expected trade negotiations to be completed within weeks.

President Trump is attending the 47^th ASEAN Summit and Related Summits in Kuala Lumpur from 26^th – 28^th October 2025, where he has held several meetings with regional leaders concerning tariffs. He is seeking to increase access to markets for U.S. agricultural goods and, crucially for his administration, to secure access to critical minerals and rare earth sectors. Such framework agreements will include exemptions from tariffs on key exports to the United States for several Southeast Asian countries, including Cambodia, Malaysia, Thailand, and Vietnam.

The United States has released a framework for a trade agreement with Vietnam, which will offer zero tariffs on selected products while granting preferential treatment by the Vietnamese Government to U.S. agricultural and industrial exports. A White House Statement said the agreement is expected to be finalised in the coming weeks, adding that both countries had agreed commitments on investment, digital trade, and services, though further details were not provided.

It has also been announced that a reciprocal trade framework between the United States and Thailand has been reached, under which the U.S. will maintain a 19% tariff on Thai exports, while identifying certain products where tariffs could be reduced or removed. Thailand will eliminate tariffs on approximately 99% of U.S. exports, covering industrial, food, and agricultural products. Both countries also signed a pact giving U.S. companies preferential access to rare earth minerals, crucial in manufacturing high-tech products such as jet engines and semiconductors. However, information released so far remains limited and given that China controls around 90% of the rare earth market, the overall impact for the U.S. may be modest.

Malaysia, as host of the 47^th ASEAN Summit, has signed a Joint Trade and Critical Minerals Agreement with the United States aimed at improving trade across Southeast Asia and countering China’s tightening control of rare earth mineral exports. Analysts say the agreement gives Malaysia an advantage in accessing the U.S export market and, in return, Malaysia will develop its rare earth and critical mineral sectors with U.S firms, while addressing barriers that affect investment, digital trade and services. Furthermore, Malaysia will commit to purchasing products from U.S companies and restricting the export of any U.S. items on the unauthorised list.

Finally, China and the United States are both keen, according to experts, to avoid further escalation of the current trade war, and have shown signs of progress. After China increased export controls on rare earth and critical minerals, President Trump responded by imposing China with 100% tariffs on Chinese goods. However, on 26^th October, it was announced that U.S. and Chinese trade and economic officials had reached an agreement on a framework for bilateral trade, and President Trump confirmed that he expects to finalise a trade deal with President XI Jinping in the coming days. Only time will tell whether the United States and China can reach a sustainable long-term agreement.

What Ignited the Recent Record Crypto Crash?

Written by IntaCapital Swiss on October 22, 2025. Posted in News & Reports. Leave a Comment

On Friday, 10th October, just after reaching an all-time high, the cryptocurrency market imploded, wiping out around half a trillion dollars in value. Bitcoin alone lost more than USD 200 billion. Most experts, analysts, and financial commentators agree that the crash was triggered by President Trump’s announcement on his Truth Social platform that he would impose 100% import tariffs on China from 1st November 2025. Following the post, Trump’s own meme coin plunged to USD 4.65, leaving his followers nursing losses of around 40% in a single day. The same coin had recently traded at a high of USD 45.

Leveraged trading has become standard practice among many crypto traders, who borrow money to increase the size of their positions. While such trades can be highly profitable, they are equally risky when prices move sharply in the wrong direction, as they did last Friday. In today’s crypto market, heavily leveraged bets are automatically closed by exchanges once losses reach a level that would make repayment impossible. Experts say this system amplified the crash, as countless traders with high leverage were forcibly liquidated by exchange algorithms once prices began to fall.

Allegations of insider trading have also surfaced after an investor reportedly placed a short position on Bitcoin, earning around USD 200 million when prices collapsed. This trade occurred just 30 minutes before President Trump’s post on Truth Social announcing the new tariffs on China. Many within the crypto community have questioned whether the investor had access to insider information from within the White House. The trader has since been dubbed the “Trump Insider”, particularly after opening another large short position on Bitcoin this week, sparking fears of a second market downturn.

The unwinding of leveraged trades also had a devastating impact on altcoins, leaving the wider market reeling. Ethereum dropped by around 11% to USD 3,878, while Cardano and Solana both fell roughly 30%. Other major cryptocurrencies such as XRP, Dogecoin, and ADA also tumbled by 19%, 50%, and 25% respectively, according to market data. Analysts say stablecoins which are pegged 1:1 to fiat currencies such as the USD, GBP, or gold, are edging closer to mainstream adoption as Congress debates the *Genius Act. However, during the sell-off on 10th October, Ethena’s yield-bearing stablecoin (USDe) briefly lost its dollar peg, plunging to 65 cents on Binance before rebounding to close just below USD 1. Financial commentators say this episode should give Congress some food for thought when refining the legislation.

The *“Genius Act”, passed in July 2025, is a U.S. law that created the first comprehensive federal regulatory framework for stablecoins. It aims to provide clarity and consumer protection by requiring issuers to maintain a 1:1 backing with high-quality assets such as cash or short-term U.S. Treasuries. The Act also establishes both federal and state licensing pathways and includes provisions for financial stability, disclosure of reserves, and legal safeguards for holders in the event of insolvency.

Experts suggest several key lessons can be drawn from the 10th October 2025 crypto crash. Earlier that week, China announced restrictions on rare earth mineral exports, reigniting speculation about a renewed U.S.–China trade war. President Trump’s retaliatory post amplified global concerns, sending shockwaves through financial markets. While traditional markets were closed, the 24/7 nature of crypto trading meant that digital assets bore the full force of the panic almost instantly.

This has been the largest single liquidation event in cryptocurrency history. Data shows that around USD 19 billion in leveraged positions were wiped out in under 24 hours, though some commentators believe the true figure could be higher. Analysts say the episode highlights the extreme risks of trading with leverage in such a volatile environment. The market’s structure also contributed to the collapse, as automatic deleveraging mechanisms at major exchanges like Binance triggered further sell-offs, creating a vicious cycle.

The crypto industry now faces serious questions about its own resilience and governance. The ecosystem is so interconnected that when one segment collapses, the rest often follow. Moreover, repeated allegations of insider trading, including claims that an unknown trader made USD 200 million shortly before President Trump’s announcement, have further damaged trust. To avoid similar crises, experts say exchanges and market participants need to adopt stronger risk management systems and institutional-grade compliance standards. However, given crypto’s historical resistance to regulation, some argue that Congress may need to intervene to ensure proper oversight as stablecoins move into mainstream financial markets.

Gold Rally Helping China Towards Less Reliance on the Dollar and U.S. Financial Dominance

Written by IntaCapital Swiss on October 15, 2025. Posted in News & Reports. Leave a Comment

China and its partner countries in BRICS* have long aspired to develop an alternative currency to the US dollar, as well as their own payment systems and other financial instruments that would reduce global dependence on the de facto reserve currency and the financial dominance of the United States. In this context, the three-year bull run in gold, confounding many sceptics and recently breaching the USD 4,000 per ounce mark (yet another record), is aiding China in its quest to diminish US influence across global financial markets.

*BRICS is an intergovernmental organisation formed as an acronym for Brazil, Russia, India, China and South Africa, established in 2009 (with South Africa joining in 2010). Membership has since expanded to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates. Saudi Arabia has been offered full membership, though its government is still considering the proposal. Partner nations with potential for future membership include Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan, and Vietnam.

Experts suggest that Russia views BRICS as a means of countering Western sanctions, while China, through BRICS, is expanding its influence across Africa with ambitions of becoming the leading voice of the “Global South”. Analysts predict that over time, BRICS will evolve into both a geopolitical and economic powerhouse, posing a direct challenge to the G7 group of nations. Current data indicate that BRICS countries account for 44% of global crude oil production, with a combined economic output exceeding USD 28.5 trillion, equivalent to approximately 28% of the global economy.

The global spotlight remains firmly on gold, and China has been steadily accumulating reserves of the yellow metal for over a decade. Experts estimate that the nation’s gold stockpile is now the sixth largest in the world. The metal’s ascent to record highs is helping China pursue its geopolitical and economic objectives. Amid escalating global tensions, protectionist tariffs, and a widening rift between the United States and its traditional allies, Chinese policymakers are capitalising on the moment.

For the first time, the Chinese government has established an offshore vault for the Shanghai Gold Exchange in Hong Kong, enhancing its status as an international trading hub. China has also approached several countries with offers to store gold in its bonded warehouses. Experts suggest that such initiatives will encourage sovereign wealth funds and central banks to trade the stored gold, diverting business away from established centres such as the London Metal Exchange (LME).

Data shows that China is the world’s largest gold producer and is expanding its influence within segments of the financial system where it faces the least resistance. The yellow metal is playing a pivotal role in helping the government achieve several of its economic ambitions. Financial commentators note that controlling a larger share of the global bullion market could elevate China’s international standing, with gold reinforcing the wider use of the yuan. This could ultimately allow China to offer the world an alternative to US financial dominance, bringing it closer to realising its long-standing vision. China has even eased capital controls to enhance its weight in financial markets, while its resurgent technology sector continues to attract international investors.

However, despite its substantial gold holdings, China has yet to make significant progress in promoting the yuan as a dominant currency within the commodities markets. Although some cross-border contracts are denominated in the yuan, analysts note that for key commodities such as oil and copper, yuan contracts possess only a fraction of the liquidity seen in dollar-denominated benchmarks and remain far from displacing the US dollar in global trade, particularly among developing countries.

Nevertheless, China is renowned for its long-term strategic approach, and its efforts to cultivate stronger relationships with central banks play a key role in its plan to provide an alternative currency framework. In light of Western sanctions on Russia and other countries, China’s economic system may appeal as a network insulated from Western political interference. As part of its persuasion strategy, China is expected to highlight examples such as Venezuela’s gold, valued at around USD 1 billion, which has been frozen for years in the Bank of England.

Western nations and other developed economies would be unwise to underestimate China’s ambitions. Should Saudi Arabia decide to join BRICS, those ambitions would gain even greater momentum. Some analysts argue that President Trump’s policies are inadvertently facilitating China’s rise, with America’s massive debt burden and escalating tariff disputes straining relationships with traditional allies. Moreover, as global debt continues to climb and geopolitical tensions intensify, fuelled further by the now popular “debasement trade” (selling currencies and buying gold), China’s ambitions may well be realised sooner rather than later.

Swiss Government Offering Gold Concessions to U.S. for Improved Tariffs

Written by IntaCapital Swiss on October 8, 2025. Posted in News & Reports. Leave a Comment

To reduce the tariffs currently standing at 39%, imposed by President Trump, the Swiss government has offered to invest in the United States’ gold refining industry in the hope that the White House will reconsider its position. The tariff has already harmed exports* to the United States, and in a statement, the Swiss Government said: “Diplomatic and political exchanges will continue with a view to achieving a quick reduction in additional tariffs.”

*Exports to the United States have been severely affected since the 39% tariff came into effect. In August, exports fell by 22% (excluding gold and adjusted for seasonal fluctuations) compared with the previous month. Swiss watch exports to America dropped sharply in August, further compounded by weak demand from China. In a statement on Thursday, 18 September, the Federation of the Swiss Watch Industry announced that all major markets were down, with the U.S. market (the industry’s largest) falling by 24%, and overall exports down 17% year-on-year.

*Gold bullion exports to the United States in August fell to 0.3 tonnes, taking a dramatic decline. However, clarification from the White House confirmed that tariffs on gold would not be implemented, a decision only formalised in September, allowing the resumption of the bullion trade. America’s trade deficit with Switzerland fell by one-third in August compared with the previous month, from CHF 2.93 billion to CHF 2.06 billion (USD 2.6 billion), marking the lowest level since 2020, according to data from the Swiss Customs Office. Overall, Swiss exports declined by just 1%, as increased shipments to Europe, Canada, and Mexico helped offset the U.S. tariffs.

Experts have advised that, according to sources close to the talks, proposals made by the Swiss government to both U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer involve Swiss refiners relocating their lowest-margin business to the United States. The offer, insiders report, also includes melting down gold bars traded in London and recasting the metal into the smaller sizes preferred in New York.

Records show that the bullion trade with the United States is, on average evenly balanced. However, this changed in the first quarter of the year as fears arose that President Trump might impose tariffs on gold. This not only created a substantial surplus but also opened up highly profitable arbitrage opportunities for traders. The first quarter distortion of Switzerland’s trade surplus figures with the United States (bullion accounted for than two-thirds of the surplus), ignited criticism of the gold industry. Attention quickly turned to the canton of Ticino, home to the world’s largest gold refining hub, through which almost all of the world’s gold passes.

Analysts suggest that the Switzerland’s gold refining industry is an easy target for U.S. politicians. However, to portray it as the villain behind Switzerland’s distorted trade surplus with the United States is considered by many to be far-fetched. The surplus, which appears to be the justification for President Trump’s 39% tariff, is, according to some experts, merely an excuse to raise levies. They note that the United States itself had a gold surplus of approximately USD 3.6 billion in 2024. The surge in gold bullion shipments from Switzerland to New York altered that balance, as many Swiss refineries operated at full capacity to melt down the 400-troy-ounce bars traded in London into the smaller one-kilogram bars preferred in New York.

Overall, the Swiss economy has remained relatively resilient. However, due to the tariffs, the government has warned that slower growth is expected for the remainder of the year. The Swiss government is currently working to diversify its trading partnerships and, together with other members of the European Free Trade Association (EFTA), signed a new free trade agreement with the South American Mercosur bloc in the third week of September. EFTA comprises Norway, Switzerland, Liechtenstein, and Iceland, while the Mercosur countries include Argentina, Bolivia, Brazil, Paraguay, Uruguay, and Venezuela.

U.S. Politicians Ensure First Government Shutdown for Six Years

Written by IntaCapital Swiss on October 2, 2025. Posted in News & Reports. Leave a Comment

The deadline for the United States Congress to approve federal funding was midnight, and once again, politicians have put America in jeopardy by refusing to agree on a budget. The Republicans and Democrats are locked in a conflict over healthcare subsidies, and while the Republican Party controls Congress, they need the Democrats to pass the funding bill. Today’s standoff could lead to the loss of thousands of federal jobs, as President Trump may well use the shutdown to trim many thousands of jobs from federal agencies. In fact, he has warned Democrats that the shutdown could well clear the path for more redundancies, which will coincide with his push to cut 300,000 federal employees by December of this year.

The current shutdown, the fifteenth since 1981, will suspend scientific research, slow air travel, delay the payment of salaries to United States troops, and lead to enforced holidays for 750,000 federal workers, costing USD 400 million per day. Regarding air travel, Vice President Vance has gone on record saying that essential staff who work through shutdowns, such as air traffic controllers, would be concerned about the non-receipt of paycheques. He warned air travellers that they may not arrive on time, as TSA (Transportation Security Administration) and air traffic controllers would not receive their wages today.

A stopgap measure was proposed to keep the government funded until 21^st November 2025. However, this was denied by Democrats, who, according to some commentators, would rather have government employees go unpaid than use the time to come to an agreement over federal funding. Both Republicans and Democrats are throwing accusations, casting blame for the shutdown at each other in the hope of gaining an early advantage in the 2026 midterm elections, where all 435 seats in the House of Representatives and 100 seats in the Senate will be up for re-election.

The problem with the funding bill is that the Democrats wish to add USD 1.5 trillion to the bill, primarily to boost healthcare and other funding. They have made it clear that not even a stopgap funding bill will be passed unless their USD 1.5 trillion healthcare funding is included, which, of course, the Republicans have flatly refused. Senior Democratic figures have accused President Trump and the Republicans of not wanting to protect the healthcare of the American people. If Congress does not approve a funding bill and the impasse continues, Obamacare premium tax credits will expire on 31st December 2025, leaving around 20 million people facing sharp premium hikes.

According to many experts, this has descended into a political impasse, with Team Trump saying they have the upper hand over the Democrats because they have rallied the rank and file behind the stopgap bill. The majority leader of the U.S Senate has said that the Democrats will be blamed, just as the GOP (Grand Old Party – Republican) was in 2013 when they engineered a shutdown over repealing Obamacare. However, this time the Democrats are asking for something to be added to the bill. The bottom line is that the Republicans need 60 votes to pass this bill (voted down by 55-45), and unless there is some political give, it appears that America is in for a lengthy shutdown.

USA and the World Bank Give a Boost to the Argentine Economy

Written by IntaCapital Swiss on September 25, 2025. Posted in News & Reports. Leave a Comment

Scott Bessent, the United States Treasury Secretary, has announced that Argentina is a “systematically important ally in Latin America” and went on to say that “all options are on the table” and “the U.S. is ready to do what is needed” to aid Argentina in stabilising its escalating financial woes. Recent heavy regional election losses suffered by President Javier Milei and a corruption scandal unnerved financial markets, placing in doubt the future of President Milei’s free-market and cost-cutting agenda. Such was the alarm felt by investors that it sparked off a run on the peso last week, which was threatening a devaluation of the currency.

Currently, President Milei heads the only Latin American economy that is allied to the United States, and Secretary Bessent was adamant that speculators would be defeated by confirming talks were taking place to provide a swap line of USD 20 billion to Argentina, and confirmed they were prepared to buy all the country’s dollar debt. Secretary Bessent went on to say that the “White House would be resolute in support for allies of the US” seeking to calm a market crisis engulfing the Argentine economy. Indeed, the peso on Monday of this week rose by 10% before rebounding to its level before the regional election loss, and dollar bonds issued by Argentina have edged higher following the latest intervention by Secretary Bessent.

However, the current calm pervading the Argentine markets is not guaranteed as Argentines will vote in mid-term elections next month on Sunday, 26^th October, and there is further alarm for investors as President Milei may lose his re-election bid in 2027. The opposition is likely to be the governor of Buenos Aires province, Axel Kicillof, who has ambitions of his own to be President and is emboldened by his recent wins in the provincial elections, but his economic views are unorthodox to say the least, and his record as described by political commentators is alarming.

Further help from Secretary Bessent when his backing turned out to be key in Argentina securing a USD 20 billion loan back in April. However, the central bank has in recent weeks stepped in to defend a weakening peso, with investors removing money from the country with worries about the government’s ability to keep the peso steady. When President Milei won the election in 2023, he pledged to bring runaway inflation under control, along with drastic spending cuts, and a stable peso was and is critical to that pledge. As a result, the Argentine central bank has in recent weeks stepped in to prop up the peso to the tune of USD 1.1 billion, which has severely depleted its holdings and put the country in an unenviable position when it comes to repaying its debt.

The intervention by President Trump via Secretary Bessent has proved to be timely. Analysts say data show that Argentina is a serial defaulter when it comes to debt repayment, but for now, markets are calm, and thoughts of default on repayments of debt have subsided. However, President Milei has very few seats in Congress, and any gains will be a boon, and the backing of the United States in such a forceful manner may well boost his flagging polling. However, if the mid-term elections go against President Milei and he has lost control of Congress, making it long odds on his re-election in 2027, experts in this arena suggest that even the might of the U.S. President and his dollars will not save him, and the markets may once again become unsettled regarding the economy of Argentina.

Federal Reserve Cuts Interest Rates

Written by IntaCapital Swiss on September 18, 2025. Posted in News & Reports. Leave a Comment

Today, and for the first time since December 2024, the FOMC (Federal Open Market Committee) cut their benchmark interest rate by 25 basis points to 4.00% – 4.25%. This comes after literally months of sustained abuse from the President of the United States, directed at the chair Jerome Powell to slash interest rates. The FOMC voted by 11 – 1 to cut interest rates, with Governor Stephen Miran voting for a 50-basis point cut with the new benchmark interest rate now at its lowest since November 2022. The two governors, Waller and Bowman, who dissented at the last vote both voted with the majority this time round in what is seen as a victory for Chairman Powell as experts had predicted as many as four dissenters.

Chairman Powell commented “Job gains have slowed and the downside risks to unemployment have risen” and he suggested that it will be reasonable to expect Trump’s tariffs will lead to a one-time shift in prices. He went on to say “But it is also possible that the inflationary effects could instead be more persistent and it is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem”. Analysts confirmed the interest rate cut was due to the rise in unemployment and officials from the Federal Reserve hinted that there may be two more cuts before the end of the year.

Experts suggest that the Federal Reserve is facing a dichotomy in that lowering borrowing costs will indeed make money cheaper but there is a risk of potentially causing prices to rise and with prices already on the up and due to tariffs the price rises could be even more severe. Recently released data showed that inflation had risen to 2.9% in August having hit a low of 2.3% in April of this year. The director of the CBO (Congressional Budget Office – known to be non-partisan) announced on Tuesday of this week that tariffs have already negatively impacted prices and they were increasing at a faster rate than anticipated.

Federal Reserve officials have said that the labour market is now their biggest concern, with Chairman Powell having stated at the end of August that the “Labour market is experiencing a curious kind of balance where demand and supply for workers had slowed” whilst warning that downside risks to the job market could see an increase in layoffs and unemployment. Chairman Powell also added, “Labour demand had softened and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant. I can no longer say the labour market is very solid”.

Commentators have already suggested that the ¼ of 1% cut in interest rates will not even begin to appease President Trump who has hurled abuse at the Federal Reserve and very personal abuse at Chairman Powell for not drastically slashing interest rates. President Trump wants to return to the era of very cheap money but has so far lucked-out on his ambition to control the Federal Reserve. Indeed, his efforts to fire Governor Lisa Cook (a Biden appointee) for alleged mortgage fraud will now go to the supreme court. Trump has long coveted controlling the Federal Reserve and he has already got influence in the Supreme Court. If, as one expert commented, Trump did gain control over the Federal Reserve and cut interest rates to 1% there would indeed be an initial big boom but it would be followed by a massive bust.

Bond Vigilantes Continue to Circle

Written by IntaCapital Swiss on September 17, 2025. Posted in News & Reports. Leave a Comment

What is a bond vigilante? They are investors who sell off government bonds to protest against official monetary or fiscal policies that they deem irresponsible or inflationary. To this end, they use the sell-off to punish governments by increasing bond yields and thus increasing the cost of government borrowing. The term Bond Vigilante was coined by an American economist Ed Yardeni in the 1980s to describe how bond markets can act as a restraint on government spending and borrowing by creating financial pressure that forces policy changes.

In the first week of this month, global bond markets were hit with a sharp sell-off before pairing losses by the week’s end, and experts advise that lessons learned from the bond markets were that investors were becoming jumpy regarding government borrowing. In the United States, triggers for the jump in yields were attached to a US court ruling which said that many of the tariffs placed on countries by President Trump were illegal, putting hundreds of billions of dollar revenue at risk. This led to lenders holding long-term treasuries to demand higher yields.

Across OECD* (Organisation for Economic Co-Operation and Development) nations gross debt as a share of GDP was 70% in 2007 and rose to 110% in 2023, the rise being responses to the global financial crisis 2007 – 2009, the Covid-19 pandemic 2020 – 2023 and the surge in the price of energy that engulfed Europe after the invasion of Ukraine by Russia on 24^th February 2022. Therefore, as government debt piled up, so did the cost of borrowings making debt markets vulnerable to episodes of quick-fire sell-offs as was seen in the first week of September.

*OECD Nations – This is an international organisation committed to democracy and market economies that serves as a forum for its 38 member countries to collaborate, compare policy experiences and find solutions to common economic and social problems, to promote sustainable economic growth and well-being worldwide. Some expert commentators suggest that they are failing on all fronts.

In the United Kingdom the recent sell-offs in the thirty-year long-dated gilt market was an indication of how global investor sentiment had shifted to nervousness about the government showing a lack of fiscal responsibility. It was pointed out by the relevant commentators that the United Kingdom still had sticky inflation issues which is currently the highest of G7 countries. These were just a number of trigger issues that jolted the bond vigilantes into action and no doubt their eyes will be firmly fixed on the autumn budget.

France is equally at the mercy of the bond vigilantes, with commentators wondering just how far politicians can push the bond market. The current deficit sits at 5.4% of GDP with recent efforts continuing to fail. Any new effort will undoubtedly bring the resignation of the next Prime Minister, the latest one, Francois Bayrou, resigned having lost a no-confidence vote. It seems impossible that this current parliament will pass a budget that will lower borrowing costs, meanwhile the current debt sits at 114% of GDP and the 10-year yield on French government bonds has risen to 3.6% which is higher than that of Greece and on a par with Italy (considered the benchmark for fiscal floundering). Sooner or later the far right and the left in the French parliament will have to come to an agreement on lowering borrowing costs, but all the while the bond vigilantes are circling.

The pressure is mounting on leaders to find reliable and credible fiscal answers to the current growing debt pile and the cost of borrowing. In the United Kingdom, pension funds are helping by buying less government bonds, however in the United States the President’s repeated assaults on the US Federal Reserve and his mercurial style of policymaking will keep the benchmark treasury market volatile. Leaders such as Trump, Starmer, Macron and others will have to summon up the willpower to rein in spending otherwise experts expect the markets will impose it for them, something no government would like to see.

Tag: USA