COP – COP followed the broad dollar move in today’s session, bouncing off of the 3,900 level we were watching and trades near 3,950 area. The flows were mixed yet overall balanced as liquidity is low today. Real Money names has shown good two-way interests while Fast Money and Corps were on the sideline. In a video message released by his office, MoF Bonilla says he will push for rate cut in September. While we anticipated that the discussion around rate cuts would begin in this meeting, still-high inflation and inflation expectations, most recently fueled by August’s upward surprise, should deter other board members from approving cuts until October.
NY Open – Contraction
Market participants are happy to take stock after a big macro week, with US Treasuries flatlining. The BoJ was a non-event, with Ueda sharing no new guidance in the presser. USDJPY is back on the 148 handle. Gilts front end outperform after UK services PMI dropped again, confirming GBP growth risks. In contrast, Eurozone PMIs point to the services contraction bottoming out. Manufacturing remains weak. NZD and ZAR outperform on no new catalysts, while INR markets reacted to news of a major bond inclusion.
While there are a few catalysts ahead, we ultimately expect the latest market trends to stay intact. US S&P preliminary PMIs at 09:45 EDT may underline the US/RoW data differential. Fedspeak at 13:00 comes in the form of Daly and Kashkari, which may give clues as to “who’s who” on the dot plot. We monitor ECB de Guindos shortly and any progress on UAW talks ahead of the deadline. Watch the weekly close in US equities, given the bearish technical set up. Elsewhere, note MXN bi-weekly CPI, CAD retail sales, CLP meeting minutes, ZAR long weekend ahead.