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LATAM: Swaps Curves Shift Higher

LATAM
BulletEM BulletEmerging Market News
  • Latam swap curves have mostly edged higher today, following by the move up in core UST yields. While core rates initially rallied as US CPI inflation came in lower-than-expected, the feedthrough to the Fed’s preferred PCE reading was less dovish, prompting a full reversal of the move.
  • Brazil DI swap rates have underperformed, with yields rising by 9-14bp at the long-end, after Feb IPCA inflation rose back above 5%. The m/m gain was the largest since March 2022 and underlying services pressures remain strong, keeping the pressure on the BCB to deliver another 100bp Selic rate hike next week.
  • In Chile, camara swap rates have also risen by 8-10bp in the belly of the curve, unwinding some of the move down in yields earlier this week. With a light data calendar, focus is on Q4 GDP figures next week and further BCCh survey data which are likely to confirm expectations for an extended interest rate pause in Chile, amid elevated inflation pressures.
  • As noted, Mexico TIIE-F swap rates have outperformed today, with yields edging down as the market awaits tariff developments, with negotiations continuing. Earlier, President Sheinbaum said that her government would wait to respond to the implementation of steel and aluminium tariffs until April 02. With domestic activity under pressure, attention turns to Jan IP stats tomorrow.
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  • Latam swap curves have mostly edged higher today, following by the move up in core UST yields. While core rates initially rallied as US CPI inflation came in lower-than-expected, the feedthrough to the Fed’s preferred PCE reading was less dovish, prompting a full reversal of the move.
  • Brazil DI swap rates have underperformed, with yields rising by 9-14bp at the long-end, after Feb IPCA inflation rose back above 5%. The m/m gain was the largest since March 2022 and underlying services pressures remain strong, keeping the pressure on the BCB to deliver another 100bp Selic rate hike next week.
  • In Chile, camara swap rates have also risen by 8-10bp in the belly of the curve, unwinding some of the move down in yields earlier this week. With a light data calendar, focus is on Q4 GDP figures next week and further BCCh survey data which are likely to confirm expectations for an extended interest rate pause in Chile, amid elevated inflation pressures.
  • As noted, Mexico TIIE-F swap rates have outperformed today, with yields edging down as the market awaits tariff developments, with negotiations continuing. Earlier, President Sheinbaum said that her government would wait to respond to the implementation of steel and aluminium tariffs until April 02. With domestic activity under pressure, attention turns to Jan IP stats tomorrow.