COP – COP rallied throughout the trading session today supported by the performance seen in risk assets. Yesterday, Banrep kept rates unchanged and delivered a slightly hawkish message on the back of stickier CPI. In USDCOP, 4100 remains the key technical level to watch, followed by 4080, which our trader believes could trigger a further move lower if broken. Flow wise, the desk saw interest to buy USD from corporates, while real money followed EMFX sentiment; selling USD and buying COLTES. On the forward curve, our trader has continued to see interest to sell spreads, mostly from fast money betting on the fact that rolls are going to be lower with respect to IBR than they have been over the past 3 months. He thinks that forward points will normalize on the back of seasonal year-end outflows, which dry up cash balances in local banks.
Risk-on sentiment was in full force overnight following a Fed pause. High-betas trade well, KRW, AUD and NZD top performers. Equities are also rallying. European indices are up more than +1%, while US equity futures modestly higher. US 2y yields consolidate at 4.95%, 10y yields at 4.71%. Our experts see more room for risk to run, though we have one more major event risk ahead – NFP on Friday. In Europe, Norges Bank kept rates on hold, reiterating hike intentions for December, while ECB speakers continued to stress “higher for longer” theme. Lane speaks shortly at 07:00 EDT
More central banks to come – BoE is next at 08:00 EDT. We expect a hold with a 6-3 vote. Hawkish guidance from Gov Bailey (press conf. 08:30) should retain chances of a hike. Gilts have rallied across the curve in anticipation, GBP also modestly higher. US initial jobless claims is a key forward-looking indicator – a larger than expected rise (Citi e. 216k) could see US yields drop further. Czech central bank’s meeting at 09:30 EDT sees a range of forecasts of 0-50bps of cuts, our economists lean is 25bps. EGP expects a hold in their deposit rate. In Latam, COP CB publishes minutes, while Chile expects activity data at 07:30 EDT. BRL and MXN markets have local holidays