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Peru erupts into fiery protests as anger boils over political crises By Reuters



© Reuters. Police confront demonstrators protesting to demand the dissolution of Congress and democratic elections instead of recognizing Dina Boloart as President of Peru, after the overthrow of Peruvian President Pedro Castillo, in Lima, Peru December 12, 202

Written by Marco Aquino and Adam Jordan

LIMA (Reuters) – As Peru navigates its career from one political crisis to the next, the country has exploded in protest, with at least seven killed last week and smoke from fires and tear gas billowing through the city’s streets. The exit seems elusive.

The spark for the current unrest was the overthrow and arrest of leftist leader Pedro Castillo after he tried to illegally dissolve Congress. This followed a months-long standoff in which lawmakers impeached him three times, the last time he was ousted from office.

Peru has been one of Latin America’s economic stars in the 21st century, where strong growth has lifted millions out of poverty. But political turmoil increasingly threatens to derail its economic stability, with rating agencies warning of rating downgrades, and blockades affecting the world’s major mines. 2 producer and protesters calling on Congress and new president Dina Pollorat to step down.


For those watching closely, it shouldn’t come as a surprise. Voters are tired of the ongoing political feud that has seen six presidents in the past five years and seven impeachment attempts.

A deeply fragmented unicameral Congress is disliked – with an approval rating of just 11%, according to poll Datum. This is lower than Castillo, who despite a string of corruption allegations was 24% just before his sacking.

“The Peruvian people are just exhausted from all the political intrigue, crime, uncertainty, and stunting,” said Eric Farnsworth, vice president of the Council of the Americas and Assembly of the Americas.

He said Polwart’s pledge to hold snap elections in April 2024 could help calm things down in the short term, but that it would not resolve the entrenched issues of voter division and infighting between the presidency and Congress.

“It’s a poisonous soup, with a weak president, a dysfunctional Congress, a deposed president seeking to create popular resistance to his lawful removal, an agitated population, and no one’s vision of how to get out of this mess.”


Peru’s constitution makes it relatively easy for the hapless legislature to initiate impeachment proceedings, while the lack of dominant political parties – the biggest popular force, controlling just 24 seats out of 130 – means agreement is tenuous on the ground. Corruption was also a recurring problem.

The only way for many Peruvians to feel heard is on the street. In recent days, protesters have blocked roads, started fires, and even taken control of airports. The police have been criticized by human rights groups for their use of firearms and tear gas. On vacation, seven people, most of them teenagers, were killed.

There are echoes of the protests in 2020, when thousands took to the streets after the trial and ouster of populist centrist leader Martin Vizcarra, who was succeeded by Congress leader Manuel Merino. After two deaths, he too had to resign.

Castillo, who is less popular but has a rural support base that helped him score a narrow election victory last year, appeared to heat things up from prison, where he is being held while he is being investigated on charges of rebellion and conspiracy.

On Monday, he called Bulwart, his former vice president, a “usurper” in a letter written to the Peruvian people as he claimed he remains the country’s legitimate leader.


“What was said recently by a usurper is nothing more than the same snot and drool of the right-wing coup promoter,” he wrote, adding a call – long popular among the younger generation of Peruvians – for a new constitution.

“The people must not get caught up in their dirty games with new elections. Enough abuse! A Constituent Assembly now! Immediate freedom!” he wrote.

Boulwart, a former member of Castillo’s far-left party who fell out with its leader and criticized Castillo after trying to dissolve Congress, called for calm across the country and pledged to form an inclusive government. But she faces a difficult reality, caught between protesters and a hostile parliament.

With the recent history of Peruvian leaders riddled with impeachment and imprisonment, it is questionable whether Boluarte can hold out until new elections.

Protesting with a Peruvian flag and a hard hat in Lima, Guadalupe Huaman, a Castillo supporter, said: “Dina Boloart is a murderer. Five people died, they said nothing. Nothing matters to her, she is rude and treacherous.”


Cutting Peru’s outlook to negative and threatening a credit rating downgrade, ratings agency S&P said in a report released Monday that there appears to be little reason for hope.

“The manner in which Peru’s most recent change of power has unfolded reflects the growing political impasse and increases the stakes ahead,” she said.

Farnsworth expressed similar concerns. He said that while Peru has a history of volatile politics, it is unclear how it will resolve things this time around.

“I think this time is a little different,” he said. There seems to be no real way.”

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Stock, bond and cryptocurrency investors remain on edge after a rough year for the markets




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Dow Jones losses are heading towards the closing bell as US stocks approach their worst year since 2008




US stocks were trimming losses heading towards the closing bell on Friday, but were still on track to post their worst annual loss since 2008, as the harvest of tax losses combined with concern over the outlook for US corporate and consumer earnings took its toll.

How are stock indices traded?
  • Dow Jones Industrial Average

    It fell about 182 points, or 0.6%, to 33,039 points.

  • S&P 500 index

    It fell nearly 26 points, or 0.7%, to about 3,824.

  • The Nasdaq Composite Index fell 72 points, or 0.7%, to about 10,406 points.

Stocks posted their biggest gains of the month on Thursday, with the Dow Jones rising 345 points, or 1.05%, to 33,221 as major stock indexes rebounded after losses incurred earlier in the week that pushed the Nasdaq Composite to a new closing low for the year. . The S&P 500 was on track on Friday to wrap up its fourth consecutive losing week, the longest streak of weekly losses since May, according to FactSet data.

What drives the markets

US stocks traded lower on Friday afternoon, on pace to close the last trading session of 2022 with weekly and monthly losses.

Stocks and bonds have been crushed this year as the Federal Reserve raised its benchmark interest rate more aggressively than many expected, as it sought to crush the worst inflation in four decades. The S&P 500 is on track to end the year with a loss of nearly 20%, its worst annual performance since 2008.

“Investors were on edge,” Mark Heppenstahl, chief investment officer at Penn Mutual Asset Management, said in a phone interview Friday. “It seems as if being able to bring prices down might be a little easier given how bad the year has been.”

Stock indices have fallen in recent weeks as the recent rally inspired by hopes in the Fed’s policy focus faded in December after the central bank indicated it would likely wait until 2024 to cut interest rates.

On the last day of the trading year, the markets were also hit by selling to capture losses that could be written off from tax bills, a practice known as tax harvesting, according to Kim Forrest, chief investment officer at Bouquet Capital Partners. .


Forrest added that an uncertain outlook for 2023 has also weighed in, as investors worry about the strength of corporate earnings, the US economy and consumer as the fourth-quarter earnings season approaches early next year.

“I think the Fed, and then earnings in mid-January — they’ll set the tone for the next six months. Until then, it’s anyone’s guess.”

The US central bank has raised its benchmark interest rate by more than four percentage points since the start of the year, pushing borrowing costs to their highest levels since 2007.

The timing of the first Fed rate cut will likely have a significant impact on markets, according to Forrest, but the outlook remains uncertain, even as the Fed tries to signal that it plans to keep interest rates higher for longer.

On the economic data front, the Chicago PMI for December, the latest major data release for the year, Came stronger than expected. Climbing to 44.9 from 37.2 in the previous month. Readings below 50 indicate contraction.


In the coming year, Heppenstahl said, “we are likely to shift toward concerns about economic growth rather than inflation.” “I think the decline in growth will eventually lead to an even greater drop in inflation.”

Read: Stock market investors face 3 recession scenarios in 2023

Eric Sterner, chief information officer at Apollon Wealth Management, said in a phone interview on Friday that he expects the US to fall into a recession next year and that the stock market could see a new bottom as companies likely review their earnings. “I think the earnings outlook for 2023 is still very high,” he said.

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite were all on pace Friday afternoon posting weekly losses of around 1%, according to FactSet data, at last check. For the month, the Dow was down about 5%, the S&P 500 was down about 7% and the Nasdaq was about to crash down about 10%.

Read: Value stocks are outperforming growth stocks in 2022 by a large margin historically


As for bonds, Treasury yields rose on Friday as the US sovereign debt market was set to post its worst year since at least the 1970s.

The yield on the 10-year Treasury note

It rose about four basis points on Friday at 3.88%, according to FactSet data, in the latest check. Ten-year yields jumped about 2.34 percentage points this year through Thursday, on track for the biggest annual gain ever based on data going back to 1977, according to market data from Dow Jones.

Meanwhile, the yield on the two-year note

Up about 3.64 percentage points in 2022 through Thursday to 4.368%, 30-year return


It jumped 2.03 percentage points over the same period to 3.922%. That marks the largest increase in a calendar year for each based on data going back to 1973, according to market data from Dow Jones.

Outside the US, European stocks capped their biggest percentage drop in a calendar year since 2018, with the Stoxx Europe 600
And the
It is an index of euro-denominated stocks, down 12.9%, according to market data from Dow Jones.

Read: A downturn in the US stock market is trailing these international ETFs as 2022 draws to a close

Companies in focus

Steve Goldstein contributed to this article.

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Fed’s reverse repo facility reaches $2.554 trillion by Reuters




© Reuters. FILE PHOTO: The Federal Reserve Building in Washington, US, January 26, 2022. (Reuters)/Joshua Roberts/File Photo

Written by Michael S Derby

NEW YORK (Reuters) – A key facility used by the Federal Reserve to help control short-term interest rates saw record inflows on Friday, the last trading day of the year.

The New York Fed said its reverse repo facility took in $2.554 trillion in cash from money market funds and other eligible financial firms, beating the previous high seen on Sept. 30, when inflows totaled $2.426 trillion.

The cash rally was almost certainly tipping into record territory in the usual end-of-quarter pattern that could worsen further towards the end of the year. On those dates, for a variety of reasons, many financial firms prefer to deposit money in the central bank rather than in the private markets.


The Fed’s reverse repo facility has been very active for some time. After seeing almost no absorption for a long time, money began to gravitate toward the central bank in the spring of 2021 and then grew steadily. Daily reverse repo usage has been steadily above the $2 trillion mark since June.

The reverse repo facility takes cash from qualified financial firms in what is an actual loan from the Federal Reserve. The current rate is 4.3%, a yield that is often better than rates for short-term private sector lending.

The reverse repo facility is designed to provide a soft floor for short-term rates and the federal funds target rate, and is the Fed’s primary tool for achieving its function and inflationary mandates. To mark the higher end of the range, the Fed is also pushing deposit-taking banks to deposit cash at the central bank, where the interest rate on reserve balances is now 4.4%.

The federal funds rate is currently set between 4.25% and 4.5% and is trading at 4.33% as of Friday, sandwiched between the reverse repo rate and interest on reserve balances.

There are no signs of shrinkage


Even with the heavy use of reverse repo, Fed officials have always remained unconcerned about large outflows, even as some in financial markets worried about the potential for the Fed to drain the borrowing and lending lives of private money markets.

Fed officials also expected that as the central bank continues to raise interest rates with the goal of bringing down very high levels of inflation, the use of the reverse repo facility should decrease. But that hasn’t happened yet, and some in the markets now believe that the consistently high utilization of the Fed facility will be around for some time to come.

Research by the Federal Reserve Bank of New York indicated that banking regulation issues make demand for the Fed’s reverse repo instrument high. Meanwhile, the Kansas City Fed added its view that large inflows are related to limited private market investment opportunities and policy uncertainty.

Strong cash flows to the central bank may not have alarmed central banks, but they have driven their operations to an actual loss. The Federal Reserve finances itself through interest on the bonds it owns as well as the services it provides to the financial community. It usually makes a noticeable profit and by law returns it to the treasury.

Currently, the cost of paying interest on reverse repo agreements and reserve balances outweighs income. The Fed reported Thursday that as of Dec. 28, the accounting metric it uses to track losses was $18 billion. Many observers expect that the Fed’s plans to raise interest rates further and keep them at high levels will mean fairly large losses for the central bank over time, even if these losses will not affect the action of the Fed’s monetary policy.


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