OVERNIGHT NEWS
# Euro Stoxx futures +0.8% after S&P 500 staged late recovery to 4,410 yesterday after 4% intraday slide, VIX spiked to 38.9, highest since November 2020, UST 10y yield 1bp lower at 1.76%, EUR/CHF rebounds to 1.0364 from 1.0300 low.
# Day ahead: German IFO business survey, Hungary CB forecast raise policy rate by 30bp, UST 5y auction.
# Australia 4Q CPI accelerates to stronger than forecast 3.5% yoy from 3.0%, core CPI climbs to 2.7% yoy from 2.1%, paves way for RBA to end QE program next Tuesday. AUD/USD +0.4% at 0.7138.
# Singapore MAS surprises with unscheduled increase in SGD NEER slope to 1.0% from 0.5%, allows for stronger ccy appreciation.
# S. Korea 4Q prel GDP +1.1% qoq (4.1% yoy), full year 2021 growth +4.0%. 4Q exports +4.3% qoq, private consumption +1.7%.
# Nikkei -1.7%, EUR 10y IRS +1.5bp at 0.367%, Brent crude +0.7% at $86.9/b, Gold +0.2% at $1,842/oz.
Rise in Oz 4Q CPI meets condition for RBA to end QE next week
COP – USDCOP has been trading higher today following the EM trend and risk asset sell off. Our local trader has been seeing inflows from Real Money and Corporate clients. The levels to watch currently are 3,957 to the downside and 4,000 to the upside. The next important event will be this Friday when Banrep meets and a 75bps hike is expected to 3.75%.Asian traders came in to a volatile end to the NY session, which saw equities rebound (and DXY pare gains) to end in the green after a heavy rout earlier in the day. Aggressive swings for stock markets continued during the Asian session with major indices all down over 1%, though given the magnitude of Monday’s moves, other assets classes have been relatively numb to the effect. DXY, JPY crept just a touch higher, while NZD and NOK were the biggest losers on the G10 spectrum. The biggest story of the day were the hot CPI prints from AUD, which is likely to put the kibosh on QE at next week’s RBA and saw Citi Economists now expecting a hike in August 2022. We also saw an unexpected inter-meeting hawkish twist for SGD as the MAS said it will raise slightly the appreciation of the S$NEER policy band.
Looking ahead, USD will wait for the Conf. Board Consumer Confidence & Richmond Fed Manufact. Index at 15:00 GMT. SEK will wait for Prospera Swedish Inflation Expectations Survey at 07:00 GMT, while EUR will see German IFO data at 09:00 GMT. HUF will see a central bank decision, in which Citi Economics expect a hike of 30bps to 2.70%. MXN will see Economic Activity data at 12:00 GMT.
Latin America:
Latam currencies followed the broader EM price action, ending the day weaker as global risk appetite remained subdued despite relatively muted local headlines. CLP was the main underperformer in the region, depreciating by ~1.2%, giving back some of its recent gains on the back of moderation in the new administration’s statements. BRL and MXN also came under significant pressure, depreciating by 0.85% and 0.63%, respectively. The price action in rates was somewhat mixed, as most curves broadly followed the price action across the US Treasury curve, with the notable exception of COPxIBR, which saw small sell-offs (4-5bp) in the belly and long end of the curve, despite a lack of significant local developments. In contrast, DI rates rallied by 6-10bp across most tenors and Jan 25 DIs closed 10bp lower, at 11.09%.
suggests it went too far and we have already started to
see long USD positioning decreasing. In terms of
duration, we prefer to remain neutral, as the country
faces many challenges that remain unaddressed due to
the proximity of the presidential elections