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EMERGING MARKETS-Brazil rate future yields fall on central bank minutes
April 18, 2017 / 3:12 PM / 5 months ago

EMERGING MARKETS-Brazil rate future yields fall on central bank minutes

    SAO PAULO, April 18 (Reuters) - Yields paid on Brazilian
interest rate futures fell on Tuesday after the minutes of the
central bank's last policy meeting showed officials considered a
steeper rate cut.
    According to the minutes, weak economic activity in Brazil
could allow for an acceleration of monetary easing, but
lingering uncertainties make the present 100 basis-point pace
more appropriate.
    Rate future yields indicated a 14 percent
probability that the central bank will cut the benchmark Selic
rate by 125 basis points on its May meeting, traders said,
compared to 8 percent on Monday. Still, investors mostly bet the
bank will stick to 100 basis-point cuts.
    Brazil's economy unexpectedly deepened late last year, data
showed, suggesting a slow recovery from the deepest recession on
record. That helped lower inflation rates to the central bank's
4.5 percent target, facilitating a steep rate-cutting cycle.
    Still, uncertainties over the approval of structural reforms
including revamping Brazil's costly pension system have put many
investors on edge. A senior lawmaker said on Tuesday the
Brazilian government has agreed to further water down the
pension reform in order to secure its approval.
    The Brazilian real strengthened 0.3 percent, while
most Latin American currencies seesawed. Many traders kept to
the sidelines amid tensions between the United States and North
Korea, which have weighed on demand for riskier emerging market
assets.
    The Chilean peso weakened 0.5 percent, following
copper prices lower.
    
    Latin American stock indexes and currencies at 1445 GMT:
 Stock indexes                               daily %     YTD %
                                              change    change
                                   Latest             
 MSCI Emerging Markets               957.34    -0.56     11.65
 MSCI LatAm                         2658.05     0.27     13.26
 Brazil Bovespa                    64334.30        0      6.82
 Mexico IPC                        48681.99    -0.67      6.66
 Chile IPSA                         4843.86    -0.34     16.68
 Chile IGPA                        24308.32    -0.28     17.24
 Argentina MerVal                  20731.07    -0.08     22.54
 Colombia IGBC                     10156.63    -0.35      0.28
 Venezuela IBC                     47128.62    -0.42     48.65
                                                              
 Currencies                                  daily %     YTD %
                                              change    change
                                                      
                                     Latest           
 Brazil real                         3.0927     0.36      5.06
 Mexico peso                        18.4740     0.11     12.29
 Chile peso                             648    -0.35      3.50
 Colombia peso                       2833.5     0.61      5.93
 Peru sol                             3.251    -0.03      5.01
 Argentina peso (interbank)         15.2200    -0.11      4.30
                                                      
 Argentina peso (parallel)            15.85     0.38      6.12
                                                      
 

 (Reporting by Bruno Federowski; Editing by Grant McCool)
  

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