Bonds News

EMERGING MARKETS-Brazil's real leads Latam FX higher, Sino-U.S. tensions brushed aside

    * Brazilian real at highest level since June 16
    * Brazil's tax reform push a step in the right direction-
    * Mexican retail sales inch up in May 
    * Argentina's $65 bln debt deal inches closer despite

    By Shreyashi Sanyal
    July 22 (Reuters) - Brazil's real jumped on Wednesday as tax
reform proposals to congressional leaders were well-received by
investors in the face of improving industrial confidence in
Latin America's largest economy, even as U.S.-China tensions
    The real firmed 2% to more than a one-month
high after Economy Minister Paulo Guedes on Tuesday delivered
the first part of the government's proposals to congressional
leaders, which will combine two federal consumption taxes into a
single value added tax.
    Analysts at Capital Economics said the push by Brazil
provided a welcome sign that the government's reform agenda is
still progressing, despite the political infighting caused by
the handling of the coronavirus crisis.
    "If implemented, the main benefits would accrue over the
longer-term by improving potential GDP growth. More immediately,
it would probably help to lower longer-term bond yields."
    In another encouraging sigh, data showed Brazilian
industrial confidence rose sharply in July, extending the
rebound initiated in May as the outlook for the coming months
across the sector continued to brighten.
    Mexican and Chilean pesos also firmed against
a weaker dollar, shrugging off the latest form of escalation
between U.S.-China relations after the United States told China
to close its consulate in Houston. 
    Data showed Mexican retail sales nudged up 0.8% in May from
April, but posted another massive drop on an annual basis due to
lockdown measures adopted in the coronavirus pandemic, while a
separate survey by Citibanamex showed Mexico's central bank will
likely cut its interest rate by 50 basis points at its next
monetary policy meeting in August.  
    Argentina and its creditors are likely to find a way to seal
a $65 billion debt restructuring deal, analysts said, despite a
standoff after bondholders joined forces to reject a government
proposal and put forward one of their own. The Argentine peso
 was flat.
    The Peruvian sol weakened against the dollar as civil
unrest hit the country.
    Protesters attacked a convoy of vehicles from the Las Bambas
mining group, one of the country's largest copper producers, and
set fire to some of them.
    Key Latin American stock indexes and currencies;
    Stock indexes              Latest      Daily %
 MSCI Emerging Markets           1077.83       -0.74
 MSCI LatAm                      2106.85        1.88
 Brazil Bovespa                104831.49         0.5
 Mexico IPC                     37057.20        0.48
 Chile IPSA                      3869.67       -0.45
 Argentina MerVal               46738.98       -0.09
 Colombia COLCAP                 1163.40       -0.28 Currencies              Latest      Daily %
 Brazil real                      5.1065        2.04
 Mexico peso                     22.2820        0.23
 Chile peso                        767.2        0.51
 Colombia peso                   3626.26       -0.12
 Peru sol                         3.5027       -0.26
 Argentina peso                  71.7700       -0.07
 Argentina peso                      128        3.13

 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Marguerita Choy)