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Large Bund downside

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  • Brazilian swap rates have risen following the inflation data released earlier, increasing the likelihood of a 100bp hike to the Selic rate at the Copom's August meeting. The front end of the DI Curve has come under pressure, with Jan22 and Jan 23 DI swap contracts rising between 17-19 basis points with the DI curve bear flattening overall.
  • BRL leading the way on Friday for Latam FX, up 0.7%, as local currencies are supported despite a broadly unchanged greenback to finish the week.
  • USDMXN (-0.4%) has broken out of the latter part of the week's range and has stalled just short of the Tuesday lows at 20.00 the figure.
  • USDCLP ever so slightly lower with technical indicators still suggesting a bearish outlook for the Peso.
  • A fairly busy data schedule next week for Mexico with economic activity and GDP data headlining the docket.
  • Given the explicit mentions to Federal Reserve policy in the opening paragraphs of the most recent central bank statements, Wednesday's FOMC statement and press conference will inevitably be the most important event for local asset prices.