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May CPI Inflation In Line, Moody’s To Speak On Colombia Fiscal Outlook

COLOMBIA
EM BulletHomepagemarkets-real-timeBulletEmerging Market News
  • The Colombian peso underperformed yesterday, as the market reopened following a long weekend, amidst news that the congressional economic committees had approved the increase of the debt ceiling by $17.6 billion. USDCOP rose by 1.29% on the day, taking the pair to a YTD high. Although carry remains high, BBVA note that the issue is more about volatility contagion and fears of more global unwinding of carry trades. They say that the unwinding of long COP positions could easily take USDCOP above the 4000 mark and into 4200.
  • Last night, May CPI inflation data came in line with expectations, with the headline rate unchanged at 7.16% y/y and the core rate moderating to 7.83% y/y, from 8.19%. Consensus there was 7.82%. Core services inflation remains elevated, albeit decelerating, at around 7.5%ar, while core goods inflation is in negative territory on a last 3-month annualised basis. The gradual moderation of core inflation keeps the door open for further rate cuts, with JP Morgan expecting another 50bp reduction at the June 28 BanRep meeting.
  • Today, President Petro is travelling to Europe for visits to Sweden and Switzerland. Meanwhile, Moody’s sovereign analysts are due to speak on Colombia’s fiscal outlook at 1725BST(1225ET).
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  • The Colombian peso underperformed yesterday, as the market reopened following a long weekend, amidst news that the congressional economic committees had approved the increase of the debt ceiling by $17.6 billion. USDCOP rose by 1.29% on the day, taking the pair to a YTD high. Although carry remains high, BBVA note that the issue is more about volatility contagion and fears of more global unwinding of carry trades. They say that the unwinding of long COP positions could easily take USDCOP above the 4000 mark and into 4200.
  • Last night, May CPI inflation data came in line with expectations, with the headline rate unchanged at 7.16% y/y and the core rate moderating to 7.83% y/y, from 8.19%. Consensus there was 7.82%. Core services inflation remains elevated, albeit decelerating, at around 7.5%ar, while core goods inflation is in negative territory on a last 3-month annualised basis. The gradual moderation of core inflation keeps the door open for further rate cuts, with JP Morgan expecting another 50bp reduction at the June 28 BanRep meeting.
  • Today, President Petro is travelling to Europe for visits to Sweden and Switzerland. Meanwhile, Moody’s sovereign analysts are due to speak on Colombia’s fiscal outlook at 1725BST(1225ET).