By Bruno Federowski
SAO PAULO, March 10 Yields on Brazilian interest
rate futures fell sharply on Friday as slower-than-expected
inflation data fueled bets that the central bank will increase
the magnitude of interest rate cuts next month.
Brazil's official inflation index rose at its tamest pace
since 2010 in the 12 months through February, below expectations
of all 24 economists polled by Reuters.
Rate future yields indicated a 60 percent
probability that Brazil's central bank would cut rates by 100
basis points at its monetary policy meeting in April, traders
said, with a 40 percent chance of a 75 bps cut.
The central bank has said the size of the rate cut will
hinge on inflation expectations and economic data.
The bank cut the benchmark Selic overnight lending rate by
75 bps each in January and February. It currently stands at
The prospect of lower rates also supported Brazil's
benchmark Bovespa stock index, which rose 0.3 percent.
The Brazilian real strengthened 1 percent, leading
gains among Latin American currencies, after it slipped over 2
percent in the first four days of the week, its sharpest
four-session percentage drop in three months.
Strong U.S. jobs figures consolidated expectations that the
U.S. Federal Reserve will increase interest rates next week.
While that could reduce the allure of high-yielding emerging
market assets, traders said markets had anticipated the result.
Key Latin American stock indexes and currencies at 1615 GMT:
Stock indexes daily % YTD %
MSCI Emerging Markets 926.35 0.37 7.04
MSCI LatAm 2538.08 0.62 7.77
Brazil Bovespa 64803.80 0.34 7.60
Mexico IPC 47250.20 -0.03 3.52
Chile IPSA 4470.15 0.05 7.68
Chile IGPA 22461.25 0.05 8.33
Argentina MerVal 18815.66 0.16 11.22
Colombia IGBC 9910.70 0.31 -2.15
Venezuela IBC 38687.33 -0.66 22.02
Currencies daily % YTD %
Brazil real 3.1637 0.96 2.70
Mexico peso 19.7025 0.65 5.29
Chile peso 663.7 0.20 1.05
Colombia peso 2988.2 0.23 0.45
Peru sol 3.285 0.06 3.93
Argentina peso (interbank) 15.4600 0.58 2.68
Argentina peso (parallel) 16 0.12 5.13
(Reporting by Bruno Federowski; Editing by W Simon)