Note On Local Yields

Local yields have risen today following a surprise beat in CPI readings. Despite a flurry of economists reinforcing their views that policy will remain unchanged for the near-term, the shift higher in the camara curve has been picking up steam.

• The 1-year peso/camara swap yield rose 6bps to 0.56%, its biggest increase since Sep. 6. A similar move in the 2 year contract saw the swap rate rise to the highest level since April 2020, rising above 0.9%. This represents a near 25 basis point rise since January 31st.
• Deutsche Bank noted Jan. CPI does not reflect permanent shocks or pressures on the demand side, therefore unlikely to change the Central Bank's stance.
• Santander added higher CPI due to liquidity shocks; wide capacity gaps to predominate once this effect disappears.