Summary 1/2

MEXICO - Risk-off saw demand for safe havens during the second half of yesterday's session. USDMXN bounced from support just ahead of 19.70 back up to highs of 19.9923.

• Mexico's 50-year bond reached $10 billion in demand, making it 3.33 times oversubscribed, according to a ministry statement posted by Finance Minister Arturo Herrera on his Twitter. 3.75% coupon is lowest ever for a Mexico long-term bond, those with 30-year maturities or longer.
• AMLO's approval at 62% in December. At the end of 2020, AMLO's approval reached 62%, down from 64% in November.
• Domestic focus this week will be on Dec CPI and the latest Banxico minutes, both released on Thursday.

BRAZIL - Initially USDBRL opened lower yesterday spurred on by positive sentiment and made lows at 5.12. Consistent demand throughout the session saw a huge reversal with the pair ending up just shy of 2% and 5.2715. The combination of weak global equity indices and the sharp move lower in oil prices, exacerbated the move.

• 5.31 high from Dec 28^th nearest short term level on the top side. Above here we have a gap to fill from Nov 30 to 5.3570. A stronger commodity complex today, USDBRL would be expected to open marginally lower.

It is understood by the market that the required unwinding of the overhedge stock by local banks has been completed, eliminating a source of uncertainty. Additionally, there are very few local headlines appearing, which should mean BRL trades in line with global factors for the rest of the week, including ongoing concerns about additional lockdowns in major economies and Georgia Senate runoff elections.

*The swap rates market, which has been less volatile than FX, will digest the first Treasury auction of the year, where inflation-linked bonds will be offered.