OVERNIGHT NEWS
# Dollar steady, UST yields recover 3bp after slump to 1.40% low yesterday on news of first Omicron case in the US. S&P extends losses to 4.9% from the high on 22 November. Futures point to 0.95% rebound today. Euro Stoxx futures -0.8%.
# Fed chair Powell repeats in House testimony it’s appropriate to consider faster taper, doesn’t see wages rising at rate that is troubling for inflation.
# OPEC+ to review planned output increase today of 400kbpd from 1 January, US jobless claims, five Fed speakers, Brazil 3Q GDP
# Turkey: President Erdogan appoints Nureddin Nebati as FinMin after resignation of Lutfi Elvan, USD/TRY +0.7%
# Nikkei -0.65%, EUR 10y IRS unchanged at 0.124%, Brent crude +1.5% at $69.9/b, Gold -0.35% at $1,777/oz
A tumultuous end to 2021 for bonds and FX
Manufacturing PMIs continued to improve for the month of November against a broadly unchanged reading in the US. Positioning of the portfolio has reduced the USD exposure especially against the G10, but still remains long against EM FX.
Positioning: The portfolio remains short EM FX with a lower positioning compared to previous months as more countries saw their manufacturing PMI improving, but overall positioning is still somewhat stretched relative to history. Nevertheless, there has been a trend of positive improvement across EM in the past few months. Positioning across DM currencies remains neutral. A few countries saw a large improvement in the signal such as South Africa, the Czech Republic and the Philippines. On the other hand, Chile, Indonesia and Brazil saw a deterioration.
COLOMBIA
The financial system has been recovering profitability since the first quarter of 2021. Banco de la República published the financial stability report for the second half of this year to assess the main risks and vulnerabilities that could affect the stability of the Colombian economy and make better decisions based on them. As an introduction to the balance sheet of the financial system, the general manager of Banco de la República, Leonardo Villar Gómez, explained that in recent months, various positive aspects of the financial system have preserved a notable degree of continuity and stability. Specifically, the liquidity and solvency of financial entities, according to the report, have been sustained well above the regulatory minimums, both individually and at a consolidated level. On the part of the overdue portfolio coverage through provisions, it continues to be high, but the financial markets for public, private and equity debt have preserved their normal functioning. As relevant data, the general manager highlighted that for the first time since the beginning of the pandemic, we have begun to see an acceleration of all portfolio modalities, a deceleration of the past-due portfolio and an increase in the profitability of credit establishments.
Grupo Gilinski launches takeover bid for Sura. According to information from the Superintendencia Financiera de Colombia and the Stock Exchange, Jaime Gilinski, through the company JGDB Holding S. A. S., requested an authorization from the regulatory entities to launch a takeover bid for up to 31.68% of Grupo Sura. At US 8.01 per share, which is equivalent to COP 32,080 pesos at this Wednesday’s TRM, that gives Sura a value of COP 18 trillion. It is important to mention that, prior to Nugil’s takeover bid for Nutresa, also controlled by Gilinski, Sura was worth 12 billion pesos. A few days ago, Grupo Sura issued a statement informing that it was analyzing the possibility of obtaining a strategic partner. With this move by Gilinski, and until the OPA process is complete, Sura will not be able to sell or buy shares and will not be able to sell assets either. The action will be suspended as of this Wednesday, while the authorization process is completed by the Superintendencia Financiera, as happened with Nugil.
In the August-October moving quarter, the unemployment rate in Colombia decreased 3.6 percentage points compared to the same period of 2020 to 12.1%. In this sense, the global participation rate was 61.4%, which meant an increase of 0.8 percentage points compared to the same period in 2020 (60.6%). Finally, the occupancy rate was 54.0%, showing an increase of 2.9 percentage points compared to the same quarter of 2020 (51.1%). For the national total, the unemployment rate for men in the moving quarter August – October 2021 was 9.0%, for women it was 16.3%. In the moving quarter August – October 2020, these rates were 12.1% and 20.8%, respectively. For the moving quarter August – October 2021, the unemployment rate for men was 7.3 percentage points lower than that for women.