COP – COP rode along the dollar weakness and higher oil price on the back of strong China PMI and Germany CPI. The pair pushed up to 4892.05 after open but soon retraced the move, dropping to the 4830 level. Colombia PMI Mgs printed higher at 49.8, comparing to 48.5 in January. The current account balance printed at -$4987M, roughly in line estimate of -$4900M. During NY hours, our local traders saw a quieter day with no conviction at the current level.
ISM Manufacturing stabilizes, rise in Prices Paid leads Fed terminal rate to 5.5%; Strong China PMIs bolster Hang Seng, CNH; CLP outperforms amid strong economic activity; BoE’s Bailey cites impact of policy tightening; EUR/GBP gains on German inflation surprise; US 10y at 3.992% (+7.3bp).
Latin America:
Latam currencies appreciated against USD, bolstered by higher-than-expected China PMIs for February. CLP led the regional rally, up 2.0% to 810 – Chile is one of the economies most exposed to China – Chilean January economic activity also surprised to the upside. MXN and BRL appreciated 0.9% and 0.8%, to 18.14 and 5.19, respectively. PEN appreciated 0.4% to 3.77, its strongest level since mid-2022.
Local rates followed US rates higher. Chile underperformed as rates rose as much as 20bp at the 2y point, driven by higher economic activity. In Mexico, 2s10s twist-steepened by 5bp, to -180bp, as the 10y ended 4bp higher at 9.00%. In Colombia, 2y IBR rose by 7bp, to 11.65%. In Brazil, DIs shifted 10-20bp higher across the curve. January 2033 DI rates ended the session 19bp higher, at 13.61%, amid unorthodox policy comments from the finance minister about the need to lower policy rates despite still elevated inflation