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Political Developments Likely To Ease Pressure On Local Assets

CHILE
  • Bonds in Chile are likely to extend gains from last Thursday after the far-left candidate lost out in primaries to a more moderate rival ahead of November's presidential election (as we noted earlier).
  • This comes following the central bank's less hawkish than expected statement which accompanied the commencement of policy normalisation in the form of a 25bps rate hike to 0.75%. Chilean front-end yields fell and may extend the shift lower in the short term with the latest political developments. As a reminder there was a national holiday on Friday.
  • CLP has been on a downward trajectory, with USDCLP pushing towards and closing around the bull trigger at 757.60, Jun 22 high. The news may provide some short-term relief for the Peso, in the face of a stronger dollar stemming from poorer risk sentiment.
  • In local news, Chile will end weekend quarantines for all municipalities in Santiago.

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