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Rates: Chilean Camara Curve Bear Flattens Following Growth Data

LATAM
  • Latam Rates Snapshot: Notable moves in Brazil and Chilean swap rates following stronger growth data in both regions earlier today.
  • The Brazilian DI curve has flattened. The front end continues to face pressure from marginally higher US yields, unwinding last week's shift lower as markets remain focused on the BCB's aggressive front-loaded tightening cycle. The rally in the belly and long end reflects strong currency gains, following the firm GDP prints that caused GS, Citi and BoA to upgrade their growth forecasts.
  • The Chilean Camara curve has bear flattened following the large surprise beat in April economic activity. This may bolster the view that the economic outlook is now significantly better compared with estimates in the March Monetary Policy Report (IPoM), potentially placing more pressure on the central bank to tighten policy sooner than expected.
  • Brazil DI Swaps:
    • 1-yr +7 bps at 5.13%
    • 2-yr +7 bps at 6.75%
    • 5-yr -2 bps at 8.17%
    • 10-yr -7 bps at 8.99%
  • Chile Camara Swaps:
    • 1-yr +10 bps at 1.05%
    • 2-yr +9 bps at 1.78%
    • 5-yr +6 bps at 2.97%
    • 10-yr +2 bps at 3.81%

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