OVERNIGHT NEWS
# Dollar stays on backfoot, 10yUST +1bp at 1.61%, Asia/commodity G10 lead FX gains, President Biden says willing to compromise on infrastructure bill
# China keeps 1y and 5y LPRs unchanged at 3.85% and 4.65% respectively for 12th straight month; USD/CNY drops below 6.4950
UK employment fell 73k in 3 months to February, better than forecast; unemployment rate drops a tick to 4.9%; average earnings ex-bonus rose to 4.4% 3m/yoy Nikkei -1.9%
# EUR 10y IRS +1bp at 0.11%, Brent crude +1.2% at $67.8/b, Gold -0.1% at $1,769/oz
Missing in action: the ECB is not leaning against higher yields
Latin America:
Currency performances in the region ended mixed, with Mexico and Brazil leading the region, appreciating in line with dollar weakness during the session. The key underperformers were PEN and COP, mainly driven by more idiosyncratic risks. For PEN, the currency depreciated against the dollar by 1.1%, to 3.6734, amid initial presidential election second round IPSOS polling showing a higher chance of an unorthodox policy shift. For COP, during an interview the Finance Minister said that Colombia’s fiscal deficit will widen, to 9.2% of GDP in 2021, as the government pays for an additional COP11.7tr of social spending. This was a 0.6% of GDP increase relative to the 8.6% estimate in March. Financing sources for the additional spending included debt, asset sales, the solidarity tax, and were aided by higher oil prices.
USDCOP drivers Monday
GLOBAL
US futures fall after the Dow Jones and S&P 500 closed at record highs on Friday. Dow Jones opens today falling (-0.17%) and the S&P 500 opens today -0.23%. Government bond yields rise, with the US 10yr yield on 1.592% and WTI oil prices rise 0.21%.
In currencies, EURUSD is trading 0.48%, USDMXN -0.57%, USDBRL -0.07% and USDCOP 0.10%.
Global Covid cases hit weekly record despite vaccinations, hitting 5.2 million cases worldwide. The increase casts doubt on hopes that the end of the pandemic is in sight.
COLOMBIA
Colombia will issue new global bonds maturing in 2032 and 2042.
Various reactions to the tax reform. The unions and social associations called for a national strike for next April 28. The strike would be against the tax reform announced by the Government, in addition to asking for the basic income.
Former President Álvaro Uribe stated that it is urgent that the tax reform has modifications. The leader of the Democratic Center expressed that the political party proposes modifications that will be accumulated with others from different parties during the process. For further reading: link.
Presidential candidate Sergio Fajardo opposes Duque’s tax reform and proposes alternatives. Fajardo says that he recognizes some positive aspects, but that overall the project is wrong. For further reading: link
In March 2021, Government’s debt in foreign currency rose to 37.90% of the total from 36.97% in the same month of 2020. The annual increase is explained by the decision of the Ministry of Finance to prioritize the debt in dollars to address the economic and social crisis derived from the Covid-19 pandemic. Also, related to the issuance of global bonds that the Government made in the first month of the year. Meanwhile, the percentage of debt in local currency fell to 62.10% in March from 62.56% in February, and from 63.03% in the same month of 2020. Obligations in euros had a slight decrease in this same period, going from 4.03% to 3.68%. In addition, the obligations denominated in UVR went from 19.27% to 17.07%.
The Ministry of Health registered 16,871 new cases and 397 deaths from covid-19, increasing the number of active cases to 104,137. At the regional level, the Ministry announced that Bogotá ranked first with the number of infections in one day with 4,377 cases, followed by Antioquia (3,065), Barranquilla (2,585), and Valle (1,023). MinSalud reported that 3.7 million vaccines have been applied against covid-19 until April 17, and 1,135,662 second doses of vaccines.
El USD no se beneficia del avance de los tipos de los UST
Los cambios en el sentimiento por el riesgo caracterizaron el comienzo de la semana, al acelerarse la publicación
de resultados en medio de una tranquila agenda macro. En el ámbito de las divisas, la principal novedad fue la
vuelta a la debilidad del USD, a pesar de que los tipos de los UST a 10 años recuperaron el nivel del 1,60%. Esto
pone de manifiesto, una vez más, la correlación dinámica entre ambas variables, cuestionando que otra ronda de
subida pueda tener un gran impacto en el USD si los datos macro estadounidenses siguen sorprendiendo al alza. El
índice del USD dejó de cotizar en torno a 91,60 para probar el área de soporte de 91
El COP cede terreno mientras los inversores asimilan la propuesta de presupuesto
Con un retroceso de alrededor del 0,3%, el COP quedó rezagado con respecto a la mayoría de sus homólogos
LatAm el lunes. Los inversores siguen asimilando la propuesta del gobierno de la semana pasada que pretende
reducir el déficit fiscal de Colombia. Fitch afirmó explícitamente que la actualización de la norma fiscal podría
impulsar la credibilidad de Colombia, pero también se espera una ardua lucha política en torno a futuras subidas
de impuestos y recortes del gasto. La última previsión de déficit fiscal del Ministerio de Hacienda se sitúa
actualmente en el 9,2% del PIB, y es aproximadamente un 0,6% superior a la estimación de marzo, lo que añade
presión a la necesidad de realizar cambios. A la vista del carácter incierto del proceso de reforma fiscal, es posible
que muchos inversores y empresas se mantengan al margen durante más tiempo. Sin embargo, a muy corto
plazo, las favorables condiciones de financiación a nivel internacional pueden mantener el apoyo del COP, ya que
las emisiones de deuda de Colombia con USDCOP 3,600 son el soporte técnico inmediato.