Local Assets Recoup Portion of 2020 Losses

The fresh boost to the Emerging Market currency space was most welcomed by the Brazilian Real, rallying over 3% with USDBRL closing at 5.3212. Relief in the swap rates curve, amid Central Bank rhetoric that the fiscal situation has not changed much since 2020, was an added tailwind for BRL. Local swap rates dropped between 7-15bps across the curve reversing some of the aggressive bear steepening seen to start the year.

Government rhetoric to the latest set of above expectations inflation figures has remained consistent. They assess the surge is unlikely to persist at such a strong pace and temporary price pressures are likely to moderate.

*Separately, Health Minister Eduardo Pazuello delivers speech on Covid-19 in Manaus city, 9am local time.

*It was noted the Sinovac vaccine had an efficacy of 50.38%, in contrast to the earlier reported range of 78%-100%. The results may complicate national distribution as the efficacy rate is very marginally above the level needed for regulatory approval, and place further pressure on the country's ability to acquire cheaper substitutes.