NY Open – Startled
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French elections sees political gridlock; all parties fall short of a majority with left-wing NFP surprisingly winning more seats than RN, who come third. European assets witness modest risk relief as an outright RN/NFP win is averted, EUR retraces overnight losses. How quickly Macron nominates a new PM will be key. In Asia, strong cash earnings in Japan renews July hike risks. USDJPY tapers close to 161. Eurozone Sentix survey saw the biggest monthly decline since summer 2022 given election uncertainty, but ZEW survey next week should be a clearer indication of sentiment. USTs are slightly weaker ahead of major catalysts (Powell on Tue, CPI on Thurs), though limited events scheduled today. NY Fed 1y inflation expectations prints at 11:00 EDT. Watch Biden noise. In EM, HUF is the weakest performer after announcements on new taxes. We expect a ILS rate hold at 09:00. BRL awaits CB economist survey details at 07:25. CLP watches CPI.
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COP: CPI YoY at 00:00 BST for June. Bloomberg consensus expects headline inflation to decelerate to 0.29% MoM from 0.43% and core inflation to decelerate to 0.35% MoM from 0.41%. Downside surprises could increase pricing of an accelerated 75bp cut at the July Banrep, though the Bank remains weary of persistent inflation risks and will likely deliver another 50bp cut.
COP Closing/Flows – July 5, 2024
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USDCOP closed lower today (-0.20%), we saw strong interest to buy from local real money accounts, offshore real money were better buyers while fast money clients were better sellers of USDCOP. Overall, we saw less client activity which is expected due to yesterday’s holiday. Interbank market also traded 60% of the daily average volume. Forward points have been barely trading during the past few days. We continue to see 1 month points trade higher on the back of higher USD cash balance, implied basis currently stands at 110 bps. |