Chair Jerome Powell said this week: "Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go."
The benchmark will have its last fixing at around 6:55 a.m. New York time on Friday, and some borrowers and lenders are still scrambling to amend contracts.
New paper from the Dallas Fed points out that although "long-term Treasury bonds may have no default risk, they have liquidity risk and interest rate risk ... especially in times of financial market stress."
The impending barrage of T-bills is a precursor to a glut of longer-term debt issues, which might result in a "demand vacuum" for longer-maturity bonds that pushes yields higher and tightens financial conditions.
Although the local rules are different and the settlements in the region do not always take into consideration the specifics of each taxpayer, it is possible to negotiate with tax authorities in Latin America. Below we comment on the main aspects of the trend in key jurisdictions such as Brazil, Argentina, Chile and Mexico.
After Jerome Powell told the House Financial Services Committee that the Fed might keep raising interest rates, the gap between yields on 2-year and 10-year Treasuries—which has inverted before each of the past five U.S. recessions—reached the largest inversion since March.
