COP – COP outperforms (+0.8%) compares to its Latam peers. Our traders have seen some selling interests in NDF spaces and from Corp names. Following up from yesterday, taxi drivers halt protests upon agreement with authorities. Ultimately, changes proposed are likely to face pushback from the MoF, as fuel prices need to rise to curb subsidies, as well as from Congress for other initiatives if they make it to a draft bill, making it unlikely for any major policy changes to result from this discussion. Given that fuel prices will likely need to rise further, the possibility of further disruption this year remains plausible.
US Treasuries twist flatten in range-bound session, rate vol softens; USD oscillates, closes unchanged; Bund sell-off post-Eurozone core HICP beat dissipates, curve bull-flattens; NOK gains as crude oil, equities rally; BoK remains on hold, but preserves optionality; US 10y at 3.877% (-3.9bp).
Latin America:
Latam currency performance ended mixed. COP and BRL outperformed while CLP underperformed. PEN (+0.2% to 3.80) and MXN (-0.2% to 18.38) closed little changed. COP outperformed the region, up 0.8% to 4861. BRL rose 0.5%, to 5.13, amid muted local catalysts, low positioning, and high carry. CLP underperformed, down 1.1%, to 807, amid weaker copper prices and already heavy long positioning.
Local rates received some support from lower US rates. Mexico gapped lower by 14bp across the curve (2y onward) as CPI came in lower than expected at the start of the session; 5y TIIEs ended the session 14bp lower at 9.20%. In Chile, the 5y tenor ended 5bp lower, at 5.98%, while Colombia rates shifted lower by 10bp, to 10.03%.