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Local Assets Under Further Pressure

BRAZIL

Further aggressive extensions in Brazilian yields seeing local swap rates higher between 20-28bps across the curve with continued steepening. Markets are pricing a level of budget creativity that seems inevitable in the near future. Continued scepticism surrounding austerity pledges from candidates for the role of speaker of the Lower House, may keep the curve under pressure regardless of the race outcome.


Evidence of the local factors at work is further displayed in the move in BRLMXN today. The pair currently resides down 1.21% proving the Real weakness is not solely down to a strengthening USD.

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