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Fed's Powell says 'time has come' to cut rates

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Argentina's Milei to veto pension reform

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Venezuela opposition leader to be called to testify

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Latam stocks up 1.9%, FX adds 1.4%

(Updated at 3:10 p.m. ET/ 1910 GMT)

By Shashwat Chauhan and Shubham Batra

Aug 23 (Reuters) - Most Latin American stocks and

currencies jumped on Friday, as investors favored risky assets

after Federal Reserve Chair Jerome Powell offered an explicit

endorsement of interest rate cuts, with the Mexican peso and

Brazil's real outperforming.

Fed's Powell said "the time has come" for the U.S. central

bank to cut interest rates as rising risks to the job market

left no room for further weakness and inflation was in reach of

the Fed's 2% target.

"Powell's speech in Jackson Hole seems to be accretive for

gold, copper and risk assets generally," analysts at TD

Securities wrote in a note.

Traders expect a quarter-point rate cut in September, but

increased bets for a bigger cut after Powell's remarks. Fed

funds futures are now pricing in a 34.5% chance of a 50-bp cut

next month, up from about 25% late on Thursday.

"He has omitted references to a gradual approach, which

implies 50 bps cuts are a possibility."

Possibilities of incoming rate cuts pushed the dollar

to its lowest level so far this year.

The Mexican peso appreciated 2.4% against the dollar

after falling for the last four sessions, while Brazil's real

added 1.9% after declining for the last three.

The Mexican peso was also on track to record its best day

since June 2020.

Among other currencies, the Chilean peso and

Colombian peso rose over 1% each against the greenback,

while the Peruvian sol bucked the trend to fall 0.2% in

light trading.

Lower interest rates in the United States benefit

high-yielding Latin American currencies, as the wide rate

differential makes them attractive for currency "carry" trades.

Prices of commodities like copper and crude oil also perked

up post Powell's comments, a positive for the region as

commodities remain one of the top exports for countries such as

Chile and Colombia.

On the equities front, Argentina's Merval index led

the gains for regional bourses with an over 1% increase,

followed by Brazil's Bovespa, which rose 0.7%.

MSCI's gauge for Latin American equities

advanced 1.9% and the gauge for region's currencies

rose 1.4%. Both the indexes, however, were set

to clock weekly losses.

Argentine President Javier Milei will veto a pension reform

passed on Thursday by the Senate in a move that is likely to

widen an ongoing rift between the libertarian president and the

opposition-controlled Congress.

Emerging market equities received $4.7 billion in their 12th

straight week of inflows, the longest streak since February 2024

in the week to Wednesday, according to Bank of America said.

HIGHLIGHTS

**

Mexican president dismisses critique of judicial reform bill

as interventionist, disrespectful

** Mexico to wait on Venezuelan voting tallies before taking

stance on election, says president

** Brazil's Samarco expects to reach 60% of output capacity

by year-end

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1104.41 0.31

MSCI LatAm 2306.53 1.95

Brazil Bovespa 136098.06 0.68

Mexico IPC 53632.82 0.59

Chile IPSA 6478.51 0.03

Argentina Merval 1596908.5 1.235

1

Colombia COLCAP 1333.6 -0.1

Brazil real 5.4785 1.88

Mexico peso 19.0571 2.35

Chile peso 909.2 1.05

Colombia peso 4025.77 1.14

Peru sol 3.7365 -0.22

Argentina peso (interbank) 945.5 0

Argentina peso (parallel) 1330 1.5037593

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