Bonds News

EMERGING MARKETS-Brazil's real rises, record retail sales help lift mood

    * Brazilian retail sales rise to highest on record in August
    * Knee-jerk response to U.S. vote in EM may be limited -GS 
    * Mexican peso reverses declines to extend gains to second
    * Colombia central bank could add liquidity measures

 (Updates prices throughout, adds comments)
    By Shreyashi Sanyal
    Oct 8 (Reuters) - Brazil's real reversed declines to trade
higher on Thursday after a record reading on retail sales,
although worries lingered about the country's public finances. 
    The real rose 0.6% in volatile trading after
falling earlier in the session. Data showed Brazilian retail
sales rose to their highest on record in August, as economic
activity continued to recover from the worst of the nationwide
lockdown measures from earlier this year.
    This comes after a report earlier in the week which showed a
pick-up in the Brazil's services sector during September.   
    Despite recent economic green shoots, investors worried
about a new fiscal package, known as Renda Cidada, exceeding the
government's spending limit after a volley of mixed information.
    "The (Brazilian) government's intention to create a new
social welfare program poses additional risk to the trajectory
of the public accounts," economists at Credit Suisse noted.  
    "Despite the government's decision to revise the proposal
after strong backlash, the source of funding for the new program
remains uncertain. The main concern is the observance of the
spending cap."
    Mexico's peso rose 0.3%, extending gains to a second
day. Investors were optimistic of a new infrastructure
investment plan unveiled by the government earlier in the week,
worth nearly $14 billion. 
    Analysts at UBS said the peso also remains exposed to global
conditions, which for now are expected to be supportive thanks
to the increased likelihood of a Democratic sweep in the U.S.
presidential election, ultra-loose fiscal and monetary policies,
and the expected approval of a coronavirus vaccine.  
    Mexican equities surged 2.3% to touch a near
seven-week high, while the MSCI's index for Latin American
stocks gained 2.7%. 
    Goldman Sachs said lighter investor positioning in emerging
markets heading into the U.S. presidential election than before
the 2016 vote suggests "knee-jerk" reactions to the outcome may
be contained.
    Argentina's peso steadied after hitting a record
low in the previous session. 
    The currency was exposed to a fresh bout of selling pressure
after the country's central bank said last week it would allow a
managed float of the peso and would abandon its "uniform daily
devaluations and introduce greater volatility."
    Colombia's central bank board could still use whatever tools
at its disposal to buoy up the economy amid fallout from a long
coronavirus lockdown, a board member said on Thursday. The
Colombian peso added 0.1%. 
    Key Latin American stock indexes and currencies at 1927 GMT:
           Stock indexes                    Latest   Daily %
 MSCI Emerging Markets                      1118.15     0.93
 MSCI LatAm                                 1904.41      2.7
 Brazil Bovespa                            97822.73      2.4
 Mexico IPC                                38259.63     2.25
 Chile IPSA                                 3650.35     1.73
 Argentina MerVal                          45186.46    0.998
 Colombia COLCAP                            1180.32      0.5
               Currencies                   Latest   Daily %
 Brazil real                                 5.5881     0.62
 Mexico peso                                21.3935     0.28
 Chile peso                                   798.2    -0.38
 Colombia peso                              3838.69     0.10
 Peru sol                                    3.5797    -0.31
 Argentina peso (interbank)                 77.1100     0.00
 Argentina peso (parallel)                      154     0.65

 (Reporting by Shreyashi Sanyal in Bengaluru; 
Editing by Alistair Bell and Andrea Ricci)