Bonds News

EMERGING MARKETS-Brazil real jumps after factory data, extended COVID-19 welfare

    * Brazil manufacturing activity jumps at record pace in
    * LatAm equities track best day since June
    * Argentina defuses fears of default after debt deal
    * Chilean peso climbs ahead of central bank meeting

 (Updates prices throughout, adds comments)
    By Sagarika Jaisinghani and Shreyashi Sanyal
    Sept 1 (Reuters) - Brazil's real jumped on Tuesday after
data showed manufacturing grew at record pace in August, while
President Jair Bolsonaro extended a COVID-19 welfare program
until the end of the year.  
    The real was up 1.8% after data showed solid recovery
in factory activity from the COVID-19 crisis, and as payments
were extended for low-income Brazilians hit by the economic
fallout from the pandemic.
    Separately, data showed Brazil's economy shrank in the
second quarter by the most on record, however analysts say the
contraction was less than feared.
    "The downturn in Brazil's economy was more modest than in
other parts of Latin America," William Jackson, chief emerging
markets economist at Capital Economics said. 
    "Relatively less stringent lockdown measures as well as
fiscal support meant that private consumption didn't suffer as
much as in the other major economies in the region." 
    The country's stock index jumped 2.5%, as miner Vale
SA jumped 3% higher iron ore prices.
    An index of Latin American currencies firmed
1.8% to its highest in nearly one month, following robust
manufacturing surveys from some of the world's biggest
    The Chilean peso as data showed a smaller-than-feared
decline in economic activity. All eyes are now on a central bank
meeting later in the day, where it is expected to keep interest
rates unchanged.
    "We think the bank will reiterate that it will keep a strong
monetary impulse for a prolonged period and that the rate will
likely remain at its technical minimum of 0.5% over the policy
horizon," said Alonso Cervera, managing director of emerging
markets economics research at Credit Suisse.
    The Colombian peso jumped 1.6% a day after the
central bank trimmed interest rates, as expected.
    The Mexican peso firmed 0.5% against a weaker dollar.
Local surveys showed factories were still hurting last month
from the pandemic, with production falling and firms cutting
workers, but the pace of the slide in business conditions eased
for a fourth straight month.
    Argentina gained backing from creditors allowing it to
exchange 99% of the bonds involved in a $65 billion
restructuring in a deal that could set a precedent for future
sovereign crises. The peso edged lower.
    A strong deal is a major win for Latin America's No. 3
economy, as it now looks to sealing a new program with the
International Monetary Fund to replace a defunct $57 billion
facility agreed in 2018. 
    A gauge for emerging market equities jumped
3.8% and was on course for its strongest session since June.
    Key Latin American stock indexes and currencies at 1943 GMT:
            Stock indexes                    Latest   Daily %
 MSCI Emerging Markets                       1117.84     1.48
 MSCI LatAm                                  2008.07     3.75
 Brazil Bovespa                            101860.95     2.51
 Mexico IPC                                 37515.37     1.83
 Chile IPSA                                  3761.99    -0.14
 Argentina MerVal                           46591.05   -0.522
 Colombia COLCAP                             1248.41     2.66
               Currencies                    Latest   Daily %
 Brazil real                                  5.3830     1.80
 Mexico peso                                 21.8140     0.30
 Chile peso                                    771.2     0.69
 Colombia peso                               3670.46     1.89
 Peru sol                                     3.5268     0.42
 Argentina peso (interbank)                  74.2400    -0.08
 Argentina peso (parallel)                       130     3.85

 (Reporting by Sagarika Jaisinghani and Shreyashi Sanyal in
Editing by Alistair Bell)