Flattening into FOMC minutes, RBNZ discussed 100bp
OVERNIGHT NEWS
# Dollar offered vs G10 and EM, 2s/10s UST flattens to -78bp. S&P500 closed above 4,000 for the first time since early September.
# Day ahead: FOMC minutes, EU, UK, US preliminary PMIs. ECB speakers Guindos, De Cos, Centeno, BoE’s Pill. South Africa CPI.
# RBNZ lifts policy rate by record 75bp to 4.25%, bigger 100bp discussed to quell inflation despite forecast of 1% GDP contraction in 2023. Peak rate forecast raised to 5.5% from 4.1%. NZD/USD pops up to 0.6193 high, AUD/NZD falls to 1.0750 low.
# Nikkei closed, Hang Seng +0.4%, EUR 10y IRS +1bp at 2.71%, Brent crude +0.3% at $88.6/b, Gold +0.1% at $1,741/oz.
Growth and inflation Europe still exposed in 2023 to energy price hikes/disruptions (% deviation from baseline, OECD)
Latin America:
Latam currencies ended the session mixed but little changed. The key mover and underperformer was CLP which weakened 2.21% to 941 in the session, after a lower-than-expected 3Q22 current account balance release at the start of the session. Local rates also ended mixed as most rates traded higher, in line with US rates. Chile was the exception, as yields fell 8-15bp across most of the curve after a lower-than-expected 3Q22 GDP print; the 10y CLPxCAM rate fell 14bp to 5.47%. In Brazil, DIs came under pressure in the session after more headlines suggested the potential choice for finance minister points to a higher chance of unorthodox policy; January 2025 DIs ended the session 21bp higher at 13.79%.
COP – Following yesterday’s price actions, USDCOP continued to trade lower early in the session. While breaking 4,910 support earlier on, the pair claims back the level later in the session. Our trader Santiago Calvache has seen mixed and small flows today.