Itaú BBA - Latam FI Strategy Daily
  • Brazil’s unemployment reaches 12.6% in February  

    We see the unemployment rate (seasonally adjusted) to recede to 11.7% by YE18, as formal jobs provide a growing contribution.

  • Brazilian Central Bank reduces reserve requirements  

    According to the BCB, the measure has potential to induce a reduction of the cost of credit.

  • Brazil’s IPCA-15 rose 0.10% in March, in line with expectations  

    Based on current information, our preliminary forecast for the headline IPCA in March is a 0.13% increase (2.72% yoy).

  • We now expect Banrep to deliver a 25-bp cut next week  

    In Colombia, the front end of the curve narrowed 2-3bps after Banrep Governor Echevarría’s quarterly inflation report presentation.

  • LatAm FX strengthen on a better external scenario  

    LatAm pairs posted gains in a risk-on session (+0.97%), as equity markets strong on the green and US Treasuries widened.

  • Currencies weaken on softer-than-expected Chinese data  

    Commodity-linked FX posted losses (-0.75%) as the Chinese industrial production surprised to the downside.

  • Brazilian markets improve by the end of the session  

    The BRL reversed intraday losses and closed at 3.2779/USD (+0.18%) after the resignation of the Brazilian Cities Minister.

  • IPCA anchors front end, long DI futures sell off on external scenario  

    Long Brazilian yields widen in tandem with core yields.

  • Mexican yields narrow as Banxico unanimously leaves rates on hold  

    A united board leaves rates on hold.

  • Higher-than-expected inflation pressures Chilean yields  

    The Chilean curve bear flattened as the CPI came in above the ceiling of market forecasts.

  • Colombian yields narrow in a late reaction to the CPI surprise  

    Back from the holiday, the front end of the Colombian curve went down on the back of the below-than-expected CPI figure.

  • Brazilian assets stage a retracement  

    The BRL outperformed the majors, closing at 3.2517/USD (+1.91%).

  • Strong US activity data weigh on LatAm FX  

    LatAm currencies weakened 1.12% as the USD strengthened on the back of strong hard data in leading indicators (ISM non-manufacturing and capital goods orders).

  • COP sells off alone while peers bounce back  

    The COP was the regional laggard (-0.76% to 3,065/USD – weakest since July) as oil prices posted losses.

  • DI futures curve steepen on Copom guidance  

    The belly of the Brazilian curve narrowed after the Copom minutes as the market reassessed the odds of the easing cycle extending into the new year.

  • LatAm assets start an eventful week under pressure  

    Major central banks will meet this week, apart from the Fed Chair announcement.

  • Banrep unexpectedly cuts the policy rate  

    The front end of the Colombian curve rallied after Banrep surprised market forecasts by delivering a 25-bp cut to 5.0%.

  • LatAm FX weakens on US tax reform market expectations  

    The USD strengthened across the board (DXY: +0.91%; EM FX: -0.23%) after the US House approved the budget resolution, triggering a sell-off in Latam currencies.

  • The Copom delivered a 75-bp cut  

    The Copom delivered the expected result, a 75bps rate cut, taking the Selic to 7.5%pa, without a bias.

  • Stronger activity and core CPI pressure Mexican yields  

    Mexican rates widened after the bi-weekly core CPI and the GDP proxy (IGAE) surprised to the upside

  • BRL underperforms, DI rates widen  

    The Brazilian curve steepened (Jan19x25: +4bps) as the BRL sold off (-1.29% to 3.2354/USD – weakest since July).

  • LatAm assets under pressure as US Senate passes budget proposal  

    In FX, the USD strengthened across the board (DXY: +0.44%) after the US Senate approved a budget resolution on Thursday.

  • Relief rally in Brazilian yields  

    The Brazilian curve bull flattened (Jan19x25: -6bps) as the Lower House CCJ voted to drop charges against President Temer.

  • Brazilian CDS reaches a 34-month low  

    Also, DI futures narrowed 1-2bps as the BCB’s activity index came in slightly below consensus.

  • MXN rallies on Nafta headlines  

    The MXN (+1.27% to 18.7934/USD) outperformed within the major currencies.

  • Nafta-related worries weigh on Mexican assets  

    The MXN is depreciating (-0.60% to 19.0257/USD – weakest level since May) amid market concerns over the fate of Nafta.

  • Mexican yields widen alone in LatAm  

    Mexican rates increased after Banxico’s communiqué.

  • LatAm yields narrow in tandem with US treasuries  

    LatAm yields narrowed on the back of stronger currencies and in tandem with US treasuries.

  • LatAm FX weakens on external headwinds  

    Liquidity in global markets was thin due to the holiday in the US (Columbus Day).

  • Mexican assets sell off on domestic and external factors  

    Mexican assets were under pressure from the increased prospects of fiscal stimulus in the US.

  • Short Andean rates narrow as CPIs undershoot projections  

    The front end of Andean curves tightened as inflation came in below the floor of expectations both in Chile and Colombia

  • Nafta headlines weigh on the MXN  

    Despite the weak dollar session, the MXN depreciated 0.31% to 18.2670/USD ahead of the fourth round of Nafta renegotiation in Washington, DC (October 11-15).

  • Colombian rates narrow on Banrep communication  

    In Colombia, yields past the 2-year narrowed after Echevarria’s speech to lawmakers.

  • Global risk on supports LatAm FX  

    LatAm pairs stood well behaved (+0.11%).

  • USD boosted by strong data and optimism over fiscal impulse  

    US Treasury yields and the USD were lifted on increased market expectations that the US government will be able to push fiscal stimuli.

  • LatAm FX weaken as NK-US rhetoric heats up  

    North Korean Foreign Minister RI Yong Ho warned that Pyongyang has the right to down US aircraft in international airspace.

  • Mexican rates narrow amid lower-than-expected CPI  

    Mexican yields went down 4-6bps past the 1-year as bi-weekly CPI came in below expectations.

  • Brazilian yields are pricing lower rates for longer  

    After the 3Q17 Inflation Report (see Macro Backdrop), the entire DI futures curve is now below 10%.

  • Brazilian rates narrow on better than expected tax collection  

    Brazilian yields narrowed as tax collection real growth accelerated (see Macro Backdrop).

  • Brazilian rates narrow as markets see the BCB on hold throughout 2018  

    Brazilian yields narrowed as Selic expectations for 2018 fell to 7.00%, matching our call.

  • BRL outperforms as CDS reaches 32-month low  

    The BRL (+0.34% to 3.1104/USD) outperformed in LatAm FX (+0.16%) as CDS fell to 180bps (-2bps).

  • Mexican yields widen, tracking US treasuries  

    The belly of the Mexican curve widened in tandem with US treasuries (5-year: +2bps to 1.79%).

  • Colombian yields widen on Banrep communication  

    The belly of the Colombian curve widened (2-year: +2bps to 4.82%).

  • Higher DM yields pressure LatAm curves  

    The rise in core yields pressured local rates.

  • LatAm FX weakens on a strong dollar day  

    LatAm pairs (-0.35%) posted losses as the USD gave back recent losses (DXY: +0.67%).

  • Post-Copom rally in Brazilian yields  

    The Brazilian curve bull flattened (Jan19x25: -11bps) after the Copom delivered the final 100-bp cut on Wednesday, September 6.

  • Selic headed to 7% in December  

    We changed our year-end call to 7.0%, from 7.25% previously.

  • Long Brazilian yields tighten on political news  

    LatAm curves shifted downwards as US Treasuries traded substantially lower in the session.

  • Thin-liquidity day in LatAm markets amid US holiday  

    In FX, Andean pairs traded range bound (COP: -0.02% to 2,932/USD; CLP: -0.03% to 624.55/USD).

  • Short Chilean rates narrow on BCCh minutes  

    The Chilean curve bull steepened (1s10s: +7bps) after the minutes of the August monetary policy meeting

  • CLP outperforms as Chinese PMI picks up in August  

    Most commodity-linked FX (+0.61%) strengthened as Chinese manufacturing PMI came in stronger than expected.

  • MXN boosted by stronger than expected US data  

    The MXN (+0.68% to 17.7208/USD) outperformed EM peers as the US 2Q GDP second reading surprised to the upside.

  • Geopolitical impact over LatAm FX proved to be short-lived  

    The BRL (+0.07% to 3.1646/USD) and the MXN (+0.16% to 17.8423/USD) erased intraday losses.

  • The CLP rallies to a 2-year high  

    The CLP (+1.05% to 628.30/USD) gained on rising copper prices (+1.11%) and falling oil crude.

  • Brazilian benchmark nominal curve steepens once again  

    The belly and the front end of the DI futures curve narrowed on the back of downward electricity tariff adjustments.

  • DI futures tighten again on lower risks to quasi-fiscal reform  

    Brazilian yields narrowed further amid increased market expectations that the TLP will become the law of the land on time.

  • Relief rally in Brazil  

    The BRL (+0.68% to 3.1415/USD) outperformed within high-beta pairs as the quasi-fiscal reform bill moved to the Lower House floor.

  • Brazilian quasi-fiscal reform on the market’s radar  

    The market is closely monitoring the debate on the TLP (new long-term BNDES benchmark rate) in the joint commission (Lower House and Senate).

  • Long DI futures widen on domestic concerns  

    In Brazil, the long end of the curve widened and the BRL (-0.57% to 3.1651/USD) weakened on market conjectures over domestic headlines.

  • LatAm FX end the week on a high note  

    LatAm currencies (+0.70%) posted gains on the back of stronger commodities (CRB futures: +0.92%) and the weaker USD (DXY: -0.23%).

  • Chilean Central Bank stays put, keeps neutral bias  

    We expect further rate cuts to materialize before yearend

  • LatAm FX weakens on increasing market volatility  

    The volatility gauge VIX increased to 14.73 from 11.74 as of Wednesday.

  • Brazilian rates stood well behaved despite fiscal targets revision  

    Brazilian yields had a muted reaction to the fiscal targets’ change (see Macro Backdrop) announced on Tuesday night.

  • Mexican rates rise on above-expected US data  

    In Mexico, long rates widened in tandem with Treasuries, after US retail sales surprised to the upside.

  • Mexican yields rise in tandem with US treasuries  

    NY Fed’s Dudley stated in an interview that he would support another rate hike this year, provided that inflation returns to a moderate pace in the 2H17.

  • Fitch downgrades Chile, outlook revised to Stable  

    The move itself is not unexpected as the country’s fiscal standing deteriorates, but it does arrive ahead of schedule.

  • Risk aversion spike batters LatAm FX  

    Global stocks still under pressure on heightened tensions in the Pacific region.

  • International tension weighs on LatAm FX  

    Geopolitical concerns in the Pacific region fuel risk aversion in global markets.

  • Chilean rates widen as inflation surprises to the upside  

    Chilean yields widened substantially as inflation came in higher than expectations

  • Brazilian CDS at the lowest since 2014  

    Brazilian risk premium outperformed, amid the risk-on mood abroad and the iron ore rally (+3.83%).

  • LatAm pairs weaken on solid payrolls report  

    LatAm FX (-0.45%) depreciated across the board after strong US payrolls report.

  • Mexican CDS reaches 32-month low amid outlook revision  

    The 5-year Mexican country risk fell to 99bps (-1bp) – below the 100bps level for the first time since December 2014.

  • We expect Copom to deliver another 100-bp cut in September  

    After that, the committee is likely to slow down the pace of easing to 50bps per meeting, with the Selic rate ending the year at 7.25%.

  • CLP rallies on still-high Chinese PMI  

    The CLP (+0.40% to 651.34/USD) and the BRL (+0.23% to 3.1245/USD) appreciated on the back of stronger metallic commodity prices.

  • BCCh hints further easing is on the table  

    In Chile, the front end of the curve narrowed after BCCh’s minutes.

  • DI futures rally as markets see a lower terminal Selic  

    The Brazilian curve bull steepened (Jan19x25: +14bps) after the BCB’s new guidance.

  • BCB keeps the easing pace  

    The Copom delivered the expected outcome, a 100bps rate cut, leading the Selic rate to 9.25% pa.

  • LatAm curves steepen on rising core yields  

    Ahead of the FOMC, higher core yields pressured long LatAm rates.

  • We now expect the Copom to deliver a 100-bp cut next week  

    Copom Cockpit: the disinflationary scenario prevails.

  • The all-Brazil rally goes on  

    Brazilian rates narrowed for the fifth straight session after another downward IPCA-15 surprise.

  • BRL back to the 3.14/USD handle  

    The Brazilian curve bull flattened amid a stronger BRL.

  • USD weakens on market skepticism over fiscal impulse  

    Accordingly, LatAm FX posted widespread gains in the session.

  • Colombian rates widen as Banrep signals easing is almost done  

    IBR swaps widened after Finance Minister Cardenas’s remarks in an interview.

  • LatAm FX rally amid another US CPI miss  

    The USD weakened across the board and the VIX fell back to 24-year lows.

  • BCCh stays on hold and maintains a neutral bias  

    As unanimously expected by market participants, the BCCh left the policy rate at 2.5% at its July meeting.

  • Labor reform clears the Brazilian Congress  

    In Brazil, country risk fell substantially (-7bps to 229bps) after the labor reform was approved in the Senate.

  • Chilean yields narrow on increased expectations of another cut  

    Chilean rates narrowed for the third consecutive session after inflation forecasts for 11 months ahead were revised to the downside.

  • Brazilian rates narrow on lower Selic expectations  

    Long Brazilian yields narrowed as professional forecasters reduced Selic projections for 2017, 2018 and 2019.

  • Chilean rates narrow after big downward CPI surprise  

    The Chilean curve bear steepened as CPI came in below the floor of expectations.

  • Mexican yields widen as Banxico sees no urgency for easing  

    The Mexican curve bear flattened amid the market’s hawkish take on Banxico’s minutes.

  • Chilean rates narrow as GDP proxy fell short of expectations  

    In Camara swaps, the 1-year fell 1bp to 2.47% and the 7-year fell 2bps to 3.88%.

  • Calm day in LatAm markets amid 4th of July holiday  

    Thin liquidity day as US markets were closed due to the independence holiday.

  • The CLP outperforms EMFX on the solid Chinese PMI  

    The pair appreciated 0.26% to 662.20/USD.

  • Andean curves steepen, Brazilian nominals rally  

    Short Chilean rates fell on the higher-than-expected unemployment figure, while the long end tracked DM yields higher.

  • BCB will target 4.25% inflation for 2019 and 4.0% for 2020  

    The government introduced an important change in the inflation-targeting framework: from now on, the CPI target will be set three years in advance.

  • BRL reverts earlier losses on commodities  

    The upbeat performance of commodities lent a helping hand to LatAm FX.

  • Rising global yields pressure LatAm curves  

    Eonia swaps widened strongly after ECB Chair Draghi hinted at a tapering announcement still this year.

  • Brazilian yields tighten amid another round of downward IPCA revisions  

    Yields tightened 3-4bps pat the Jan-18, owing to downward revisions to inflation expectations.

  • Mexican rates rally again, still reflecting Banxico’s new guidance  

    Mexican rates kept adjusting to Banxico’s new flight plan.

  • Mexican rates narrow as Banxico signals the tightening cycle is over  

    Mexican yields took the route south after the central bank asserted that the its baseline scenario is not to hike anymore.

  • COP underperforms again as oil falls to 10-month lows  

    The COP ranked the second bottom performer within EMFX, as oil prices kept going down.

  • Oil rout pushes the COP above the 3,030/USD handle  

    The COP weakened 1.89% to 3,033.03/USD, as oil prices tested mid-November lows.

  • Brazilian yields narrow amid lower inflation expectations  

    Brazilian rates narrowed substantially, as the consensus revised inflation projections to the downside again.

  • Back from the holiday, Brazilian rates rally  

    The DI futures curve bull flattened (Jan18x21: -10bps).

  • The MXN trades below 18/USD for the first time since May 2016  

    LatAm FX strengthened after soft CPI data in the US, but later staged a correction as the FOMC has not changed its guidance meaningfully.

  • The MXN extends post regional elections rally  

    The MXN is gaining 0.45% to 18.05/USD – level last seen in May 2016.

  • DI futures narrow as inflation expectations decline  

    Brazilian rates fell as IPCA expectations for 2017 considerably fell.

  • Brazilian yields narrow as IPCA prints below expectations  

    DI futures narrowed substantially as May annual inflation fell to 10-year lows.

  • The CLP outperforms on solid Chinese trade data  

    The CLP strengthened 0.45% to 666.06/USD on the back of higher copper prices

  • Oil rout hurts the COP  

    Oil prices dropped (WTI: -4.94% to USD 45.81/bbl) after the DOE report showed crude supplies unexpectedly rose by 3.3 million barrels last week.

  • After the Copom minutes, a 75-bp cut becomes the market’s baseline  

    The board seems to reaffirm that the next move, in late July, is more likely a 75-bp cut.

  • Mexican assets outperform amid state election results  

    The MXN rallied 1.84% to 18.38/USD, testing levels last seen in mid-September 2016.

  • LatAm yields narrow amid moderate US payrolls  

    LatAm curves took the route south after US labor report showed moderate payroll growth and tame wage pressures.

  • The Brazilian curve flattens as BCB signals slower easing ahead  

    In DI futures, the Jan-18 widened 14bps to 9.39% and the Jan-25 went up 8bps to 11.04%.

  • Copom delivers a 100-bp cut, as expected  

    The Copom took the widely expected decision, cutting the Selic to 10.25%, without a bias, in an unanimous version.

  • Labor reform headwinds impact Brazilian yields  

    DI futures widened after the voting of the labor reform in the economic affairs commission of the Senate was cancelled.

  • DI futures back to recent lows on a thin-liquidity day  

    Liquidity was thin in LatAm markets due to holidays in the US, UK and China.

  • Moody’s downgrades Brazil’s outlook to negative from stable  

    Moody’s changed outlook on Brazil’s Ba2 issuer rating to negative from stable.

  • The CLP bucked the LatAm trend amid oil rout  

    Opec together with Russia and other non-members agreed to prolong their accord through March 2018, frustrating market expectations of a more aggressive deal.

  • The MXN strengthens on the back of Fed minutes  

    The FOMC minutes indicate a rate hike in June.

  • S&P places Brazil on CreditWatch negative  

    On Monday (May 22), S&P placed Brazil’s sovereign ‘BB’ long-term foreign and local currency credit ratings on CreditWatch with negative implications.

  • Mexican yields took the route north after the GDP upward surprise  

    TIIE swaps widened after 1Q17 GDP came in better-than-expected, beyond the robust flash estimate.

  • LatAm FI Strategy Daily - We now expect Banrep to deliver a 50-bp rate cut next week - May 19, 2017  

    We believe the increased concern with activity will likely lead a majority of the board to favor a second consecutive 50-bp rate cut to 6.00%.

  • Brazilian markets sell off amid political uncertainties  

    Brazilian rates sold off with DI futures testing the circuit breaks upside limits.

  • LatAm FX sell off on external headwinds  

    Markets traded in a risk off tone as investors focused on political concerns in the US and the government’s ability to push through its pro-growth agenda.

  • DI futures price in a lower terminal Selic  

    The Brazilian curve bull flattened (Jan18x21: -5bps) as markets reassessed the terminal Selic rate.

  • We now expect the BCB to deliver a 125-bp cut in May  

    We also forecast another 125-bp cut in July, with the Selic reaching 7.5% by October and staying there until end 2018 (we had a 8.25% terminal rate before).

  • LatAm FX strengthen as soft inflation reinforces a gradual Fed  

    Treasuries narrowed as US core CPI indicates another soft core PCE print in April.

  • DI futures price in a deeper cut after batch of weak activity data  

    The DI futures curve implies roughly 117bps in rate cuts for the Copom meeting in May.

  • Brazilian yields narrow on positive pension reform headlines and sustained disinflation  

    DI futures narrowed as articles suggest the government is reaching the necessary votes for the approval of the pension reform in the Lower House floor.

  • Brazilian rates tighten as coincidents herald another IP drop  

    Brazilian yields narrowed as coincident indicators suggest the industrial production weakness will extend into 2Q17.

  • LatAm FX depreciate on weak Chinese trade data  

    Metals and grains posted losses as Chinese imports slowed down.

  • LatAm FX stage a recovery as US payrolls herald a gradual Fed  

    The report is positive for risky assets as the US economy keeps expanding without major wage pressures and the Fed’s can remain gradual.

  • LatAm FX weaken on external headwinds  

    Local currencies underperformed tracking EMFX (-0.53%) and lower commodity prices (Commodity FX: -1.15%).

  • Markets see deeper Selic cuts ahead after weak IP data  

    For the next Copom, the market is pricing in 114bps in rate cuts. For the remainder of the year, the curve implies roughly 244bps in rate cuts.

  • Brazil outperformed ahead of Social Security Special Committee voting  

    The BRL outperformed the majors, as the market had a positive interpretation of government officials’ communication about pension reform.

  • LatAm FI Strategy Daily - The MXN closes the week on a positive note - April 28, 2017  

    The MXN ended a volatile week on a high note, buoyed by Moody’s decision to affirm Mexico’s rating and better headlines about North American trade relations.

  • DI futures sell-off takes a breather after labor reform voting  

    Long Brazilian yields oscillated up 1-2bps as pension reform concerns lose some steam after the labor reform cleared the Lower House.

  • The BRL remains under pressure; Nafta jitters weigh on the MXN  

    Lingering market concerns over the Social Security voting are still hurting the BRL; new market conjectures over North American trade relations hit the MXN.

  • LatAm pairs underperform EMFX peers  

    The BRL depreciated 0.61% to 3.1472/USD. The tender pared the opening losses after the Lower House Special Commission approved the labor reform.

  • Relief rally for the BRL after France first round election  

    The BRL outperformed its LatAm peers, closing at 3.1279/USD (+0.62%), as France heads towards a Macron-Le Pen run-off.

  • Colombian yields narrow on weak confidence and Banrep communication  

    The front end and the belly narrowed 1-3bps as consumer confidence slipped further into pessimistic territory and also after Co-director Maiguashca interview.

  • The MXN sells off amid oil rout  

    The Mexican Peso registered the largest daily loss in 3 months, depreciating 1.31% to 18.84/USD.

  • BCB minutes reveal the board discussed sharper cuts  

    Short DI Futures tightened after the Copom minutes revealed that it considered a more aggressive move than the 100-bp cut that was delivered.

  • The BRL outperforms on strong Chinese data and the BCB intervention  

    Yet, the BRL was also boosted by signs that the highly awaited presentation, by Social Security reform rapporteur Maia, will come through on Tuesday (April 18).

  • BCCh cuts the TPM by 25bps  

    The move surprised us in a month when the market was divided.

  • Copom cuts Selic by 100bps  

    We expect the board to repeat the move in its next meeting, on May 30-31.

  • LatAm FX weaken as markets focus on geopolitical risks  

    Market concerns over the Asian and Middle Eastern geopolitical outlooks prompted a flight to haven.

  • DI Futures narrow as markets see the bulk of easing coming before yearend  

    For the next two meetings (April and May), the curve implies roughly 197bps in rate cuts.

  • Brazilian rates end a volatile week on a high note  

    Yields in Brazil narrowed after the soft US Payroll and the confirmation of the lowest 1Q inflation since the Real Plan.

  • Caution over reforms keep Brazilian assets under pressure  

    The Brazilian curve bear steepened on market concerns over the Social Security reform.

  • Mexican yields tighten on weak activity data and Banxico’s guidance  

    While consumer confidence posted a timid recovery from historical lows, Mexico’s gross fixed investment declined at the margin.

  • The BRL outperforms as political risks recede at the margin  

    The BRL (+0.68% to 3.0935/USD) topped its LatAm peers as the market reduced the risk of discontinuity in the fiscal reform effort.

  • Chilean yields narrow on weak outlook for activity  

    Chilean rates edged lower as February’s retail sales unexpectedly contracted and BCCh lowered its growth forecast range for 2017.

  • Brazil announces a new long term benchmark rate  

    According to BCB governor Goldfajn, the new TLP rate “is consistent with a lower structural interest rate in the medium term”.

  • The Brazilian curve bear flattens as the 100-bp cut becomes the market baseline  

    The Inflation Report signaled a “moderate” increase in the pace of easing, which we take to mean an increase to 100bps from 75bps.

  • The MXN rallies as oil prices recover  

    The MXN outperformed the majors in the session, trading at 18.71/USD (+1.73%) – strongest figure year to date.

  • Profit taking in Brazilian rates ahead of the budget cut announcement  

    Long DI Futures increase as the government delayed the announcement of the budget measures aiming to compensate the fiscal deficit shortfall.

  • Brazilian yields tighten as the consensus sees a lower inflation target for 2019  

    The DI Futures curve bull steepened as long inflation expectations drop below 4.50%.

  • Banrep delivers a 25-bp cut in another split decision  

    Cuts larger than 25-bp seem unlikely for now.

  • The BRL sells off as the market sees risks to the fiscal reform  

    In rates, Brazilian bond yields increased in the session on concerns over an inflationary effect of a possible tax increase next week.

  • Brazilian yields widen on concerns over the Social Security reform  

    In DI Futures, short rates inched down (Oct-17: -1bp to 10.41%) and long rates went up (Jan-19: +4bps to 9.52%).

  • The BRL weakens on lower commodity prices  

    Metals sold off as iron ore prices fell 3.20% and copper decreased 2.08%.

  • We expect Banrep to deliver a 50-bp cut this week  

    We see a cut in Friday as a given amid falling inflation and expectations as well as a board more mindful on the activity slowdown.

  • Chilean yields narrow as the market believes the easing cycle is not over yet  

    In our Monthly Strategy Report we argue that the Brazilian nominals have room to compress further.

  • Andean FX outperformed in a delayed reaction to the Fed  

    Brazil registered formal job creation in February for the first time since March 2015.

  • MXN rallies on FOMC’s guidance and reduced Nafta renegotiation jitters  

    MXN outperforms as the US wants to use higher rules of origin to "develop a mutually beneficial regional powerhouse".

  • We now expect a 100-bp cut in the next Copom meeting  

    We expect two cuts of 100bps (in April and May), two cuts of 75bps (in July and September), and one cut of 50bps (in October).

  • Brazilian yields narrow further as the market expects lower inflation  

    The Brazilian curve tightened as inflation expectations for 2017 went down to 4.19% and Selic expectations for YE17 fell to 9.0%.

  • Brazilian yields rally after another downside CPI surprise  

    The Brazilian curve bull-flattened as February’s inflation came in below the bottom of market estimates.

  • LatAm curves steepen on external headwinds  

    LatAm curves bear steepened, except for Colombia, on the back of the post-ECB sell-off in DM yields

  • LatAm FX depreciate after solid US labor market data  

    After strong ADP figure, the market revised to the upside expectations for Friday nonfarm payrolls report

  • LatAm FX strengthen after unexpected rise in Chinese FX reserves  

    Brazilian rates traded higher in the session, despite disappointing 4Q16 GDP data.

  • Most of LatAm FX weaken on signs of a shift in Chinese economic policy  

    Metals posted losses after the Chinese GDP policy shift to “around 6.5%”.

  • Brazilian and Mexican assets end the week on a high note  

    The Brazilian curve bull flattened on the back of the BRL correction and BCB governor interview.

  • LatAm FX sell off on higher odds of a FOMC hike in March  

    The BRL was the regional laggard as a Fed’s hike in March is the market’s new base case scenario.

  • The BRL weakens and yields widen  

    Some profit taking in Brazil before the long holiday (Carnival) and political concerns.

  • Brazilian yields tighten after Copom statement  

    In rates, after the Copom’s 75-bp cut, DI Futures tightened further.

  • Copom cuts the Selic rate by 75bps as expected  

    DI Futures tightened further. The curve shifted downwards 7bps, on average.

  • Ahead of the Copom, DI Futures inch down  

    Risk-on day, with markets adjusting to the prolonged weekend in the US.

  • Brazilian yields tighten as inflation expectations retreat again  

    Quiet session, with the market operating with thin liquidity amid the US holiday (President’s day).

  • LatAm FX weaken on higher political concerns in France  

    Brazil is moving to a new equilibrium; so we hold a bullish view on local rates, even though our tools show little mispricing.

  • Long Brazilian yields widen on profit taking  

    The belly of the DI futures curve was pressured following the LTN and NTN-F auction and some profit taking.

  • Upbeat global sentiment supports LatAm FX  

    The CLP appreciated to 639.08/USD, as BCCh stood on hold on Tuesday's meeting, surprising a considerable part of the market.

  • Latam yields widen on Fed guidance  

    Long DI futures halted a 10-day rally and the BRL tested levels last seen on July 2015.

  • Brazilian breakevens tighten on higher market expectations of an inflation target reduction  

    Long NTN-Bs widened substantially , as market debates the odds of a reduction of the CPI target for 2019 as early as June

  • LatAm FX rally on positive external events  

    The BRL reached a year-to-date low of 3.1151/USD, boosted by the rise in iron ore prices.

  • Banxico hikes to keep inflation expectations well-anchored  

    The Mexican curve bear-flattened (1s10s: -7bps), as Banxico hiked more than implied in the front end.

  • Brazilian yields rally after inflation surprises downwards  

    In Brazil, the DI curve bull-flattened, as inflation came close to the lowest of market expectations.

  • LatAm yields manage to narrow, despite political concerns in Europe  

    The Mexican curve fell, overall, roughly 4 bps.

  • Brazilian yields narrow as IPCA expectations for 2017 recede  

    In rates, the DI Futures curve bull-flattened slightly (Jan19x26: -3bps), following the downward revision in inflation expectations.

  • Brazilian yields rally after the U.S. labor report  

    Brazilian nominal rates staged another rally, echoing the post-payroll risk on mood.

  • LatAm FX strengthen ahead of the U.S. payrolls report  

    In LatAm FX, Andean pairs staged a late reaction to the FOMC meeting.

  • The BRL and the MXN strengthen after the Fed  

    EM currencies posted gains, after the FOMC made only marginal adjustments to its near-term outlook.

  • The BRL weakens as the market reexamines BCB intervention  

    Governor Goldfajn stated BCB’s decision to roll-over the FX swaps expiring in March (USD 7 billion) will depend on market conditions

  • The Colombian curve bear-flattens as Banrep eyes inflation expectations  

    The Colombian curve flattened substantially, in a late reaction to Banrep’s hawkish tilt.

  • Brazilian yields end the week on a high note  

    Brazilian rates staged a rally, amid a positive external environment and good news on inflation front (cut in gas prices, maintenance of green flag).

  • Uncertainty over North American trade relations weighs on the MXN  

    The MXN was the regional underperformer (-1.13%), amid growing uncertainties over the U.S.-Mexico trade relationship.

  • The CLP appreciates alone on copper gains  

    Mexican yields rose 2-3bps past the 5-year; breakevens widened as well, echoing the above expected CPI print.

  • Industrial business confidence preview points to noteworthy improvement in January  

    The preview points to a 3.7% increase in confidence in January, above our expectations (+2.0%).

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