OVERNIGHT NEWS
# G10 FX and core bond yields rangebound, pre-CPI vigil. 2y/10y UST drops to -46.8bp. THB stretches gains to 4% from July low on higher tourism arrivals, downgrade of Covid threat level.
# NY Fed inflation expectations over 5-year horizon ease to 2.3% in July from 2.8% in June, 1-year ahead expected wage growth unchanged at 3.0%.
# Day ahead: CPI for Hungary, Mexico and Brazil. Germany, UK and US benchmark auctions.
# Nikkei -0.9%, EUR 10y IRS unchanged at 1.76%, Brent crude +0.1% at $96.7/b, Gold -0.2% at $1,785/oz.
Inflation has peaked in Brazil but not in Mexico.



Latin America:
Latam currencies ended the session stronger, supported by improved risk appetite as local headlines remained relatively quiet. CLP was the region’s best performer, gaining ~1.2% as both the BCCh and the Treasury continued to sell USD. BRL appreciated ~1.1% while MXN appreciated ~0.7%. The price action in local rates was relatively mixed, as IBR and CAM rates closed broadly unchanged for the session, while DI rates continued to rally ahead of the upcoming July IPCA print. In Brazil, the DI rally was mostly concentrated in the belly and long end of the curve, as January 2027 DIs closed 35bp lower, at 11.66%.
COP markets are likely to digest the implications of the tax reform proposal. The bill sent to congress on Monday proposes a permanent annual wealth tax of 0.5% on assets of more than about COP2.7bn, rising to 1% on fortunes exceeding about 4.6bn. It would also introduce a 10% export tax on oil, coal and gold when their prices are above an international reference price. The proposals aims to boost 2023 tax revenue by the equivalent of 1.7% of GDP (during the campaign, Petro had called for tax increases equivalent to about 5% of GDP so this may be viewed as more conservative than expected). The measures will now be debated in the coming weeks.