NOTICIAS DURANTE LA NOCHE
* La curva de EE. UU. Y EUR se empina intacta, KRW sube a 1.160 / USD, S&P supera los 3.200 puntos y Brent supera los $ 66; Treas Sec Mnuchin dice que el texto del acuerdo de la fase uno se publicará y firmará a principios de enero; Japón aprueba un gasto de $ 939 mil millones para el año fiscal 20/21
* Reino Unido: se espera que el Parlamento apruebe el proyecto de ley ajustado del Brexit, vote a las 14.30 Ldn; El jefe ejecutivo de la FCA, Andrew Bailey, propuso ser confirmado hoy como sucesor del gobernador de BoE, Carney; GBP sufre la peor semana de 2019
* China deja 1 año de LPR y 5 años de LPR en 4.15% y 4.80%; PBoC inyecta liquidez neta CNY280bn, la mayoría desde el 17 de enero
* India 10y los rendimientos caen 13bp, RBI recurre al ‘giro de la operación’ – planea comprar INR100bn ($ 1.4bn) 10y bonos y vender la misma cantidad de 1y notas en una subasta el lunes
* Colombia derribará el telón de las reuniones del banco central de 2019 con un status quo de 4.25%
* Nikkei -0.2%, EUR 10y IRS unch a 0.16%, crudo Brent + 0.10% a $ 66.6 / b ¿
Retorno de los vigilantes? Prepárese para la venta de bonos de enero si se repite 2017 y 2018
Las monedas latinoamericanas deslumbraron nuevamente liderado por CLP, COP y BRL. La lira tuvo un rendimiento inferior con un descenso del 2,2%. El USD / TRY está en camino del cierre semanal más alto desde finales de mayo, cerca de 5.93 después de la decisión del regulador turco de limitar los swaps de divisas a corto plazo al máximo del 10% del capital de los bancos nacionales. Banxico redujo las tasas en 25 pb hasta el 7,25%, pero las tasas se mantuvieron en espera en la República Checa, Indonesia, Tailandia y Hungría. El MNB de Hungría mantuvo el objetivo de liquidez desplazada en HUF300-500bn en el 1T20 y aumentó el esquema de compra de bonos corporativos en HUF150bn a un total de HUF450bn. La propia versión del RBI de ‘giro de operación’ desinfló los rendimientos de 10 años del INR en 16 pb hasta el 6.62%
Rationale:
✓ Protests in Colombia are likely to increase fiscal pressure and
reduce the prospects for passing meaningful pension and tax reform,
keeping the COP volatile and under weakening pressures. Although
there have been some positive exchanges between President Duque
and Cambio Radical to support a reform agenda, there is the risk of
milder than expected reforms.
✓ Colombia’s credit vulnerability will likely increase if the
government is unable to secure a more disciplined fiscal outlook. Recent
comments by the Finance Ministry suggests that Colombia’s 2020
budget will benefit from higher profits from the central bank, yet these are
non-recurrent and would not decrease the need to pass reforms.
✓ The outlook for BRL is better on a relative basis, supported by
rebounding economic activity, ending of the easing cycle, and a push
for market friendly policies. Moreover, the central bank is willing to
continue intervening to provide liquidity and reduce volatility.
Key levels & strategy:
✓ Add exposure: Carry is neutral and we target the cross moving
toward the upper end of the five year range. .
Risks & what to watch for:
✓ Reforms in Colombia and poor growth in Brazil: The Duque
administration manages to pass meaningful reforms (e.g. pension and
tax reforms) without being watered down. Meanwhile, growth in Brazil
disappoints not only complicating the passage of important structural
legislation but increasing political risk.
El COP supera al resto de divisas LatAm a la espera de que BanRep estabilice los tipos de interés
El COP avanzó cerca de un 0,4% superando al resto de divisas LatAm el jueves y acercándose cada vez más al
soporte del USDCOP3300. El avance fue constante a lo largo del día. La baja volatilidad, el debilitamiento del USD
y la subida de los precios del petróleo podrían haber contribuido a la fortaleza del COP. El codirector del Banco
Central, Ocampo, presentó su renuncia a última hora del miércoles, ya que volverá a su puesto en Columbia en
enero de 2020. Aunque se le considera uno de los miembros más dovish del consejo, no creemos que a corto
plazo se produzca un cambio en la dirección de su política. Antes de su marcha, se espera que el banco mantenga
los tipos sin cambios en el 4,25%, pero posiblemente añada algunos matices hawkish a su postura el próximo año,
corroborando el riesgo de subidas que las curvas han comenzado a descontar. Esta posición constituye un apoyo
moderado para el COP, aunque nuestro escenario base sigue siendo el de unos tipos de interés estables el
próximo año, lo que eventualmente también limitará el atractivo del COP.
Latam in focus.
· COP: The most important event of the day will be the Banrep rate decision. Citi Economics comments that Banrep should keep interest rates unchanged in its final monetary policy decision of 2019. Inflation expectations still stand above the mid-point target for next year, while a negative output gap remains. We also get industrial and retail confidence for November.
02The GBI-EM Investors’ Lowdown
GBI-EM recovered the November losses in December: EM local markets had a weak month in November, led by the sell-off in some LatAm countries. But all the losses were reversed in the first two weeks of December, with the GBI-EM index up 0.8% in the past one month and half. Investors generally outperformed the benchmark during the period but the alpha remains quite small. In 2019, the performance of 74 GBI-EM funds we track is more or less in line with the benchmark, with outperformance in the first seven months of the year before giving up most of the alpha in August.
Investors’ consensus into 2020: Investors apparently are in their PnL protection mode because 1) most investors have seen double-digit returns in 2019; 2) the news on trade talks remains fluid; 3) the sell-off in LatAm caught some investors off guard. Hence, the risk appetite to move their exposures in either direction is very limited, given their neutral positioning. We summarize investors’ consensus view/positioning into 2020:
- Duration: Investors seem happy with their OW duration exposure but most acknowledge that 2020 is unlikely to see a repeat of 2019’s duration rally. Bond valuations are not attractive. However, barring a spike in US treasuries yield, investors are likely to hold their positions with some tactical changes in some low yielders.
- EMFX: Most investors see EMFX valuations as attractive but expect it may be difficult to generate alpha, given the experience of 2019. The underlying reason is that the USD remains range bound while US equity has been doing well, removing downside risks for USD. Meanwhile, EM growth is picking up, offering good carry, but not necessarily spot appreciation.
- Country selection: This year, lots of positive alpha was generated from some off-benchmark holdings such as Egypt, Nigeria and Ukraine, which continue to be popular trades among investors. In GBI-EM countries, Russia, Indonesia and Brazil are the consensus long with some good domestic stories to tell. PLN, THB and ZAR appear to be the consensus UW in FX space.
What Changed In November
In November, investors cut exposure in Brazil (bond/FX), Peru (bond/FX), Mexico (bond/FX), Colombia (FX) and Thailand (FX) while they increased positions in Chile (FX), Czech (FX), Poland (bond) and Russia (bond/FX).
Chile: As we mentioned in last month’s lowdown, the positioning in Chile is not a concern but the sell-off in CLP is weighing on other LatAm currencies. However, given the central bank’s decision to intervene in the FX markets, most investors seem to be using the opportunity to increase their CLP exposure from MW to OW.
