Bonds News

EMERGING MARKETS-Brazil's real dips on fiscal angst, record retail sales limits losses

    * Brazilian retail sales rise to highest on record in August
    * Knee-jerk response to U.S. vote in EM may be limited -GS 
    * Argentine peso steadies after hitting record low  

    By Shreyashi Sanyal
    Oct 8 (Reuters) - The Brazilian real traded lower on
Thursday on continued worries about the country's public
finances, although a record reading on retails sales helped
limit declines, while other Latin American currencies struggled
for direction. 
    The real edged 0.2% lower, as investors
worried about a new fiscal package, known as Renda Cidada,
overshooting 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."
    Data from Latin America's biggest economy provided some
support to the currency after 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.
    Mexico's peso was mostly flat in volatile trading.
Data showed Mexican inflation cooled to 4.01% in the year
through September as consumer prices for energy dropped and food
price rises were lower.
    A recent Reuters poll showed that Latam currencies are set
to remain weighed down this quarter by continuing fears about
Brazil's public finances and Mexico's close link to U.S.
politics before the November presidential vote. 
    However, 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 it hit in the previous session. 
    The currency was exposed to a fresh bout of selling pressure
after the country's central bank said it would allow a managed
float of the peso and would abandon its current "uniform daily
devaluations and introduce greater volatility".
    The Chilean peso dropped against the dollar after
prices of its main export, copper, fell from a near one-week
high hit in the previous session, as top consumer China was
absent from the market due to a major holiday.
    Stocks in Latim America were mostly higher, with the MSCI's
index rising 0.6%, tracking a higher open on
Wall Street.
    Key Latin American stock indexes and currencies at 1358 GMT:
          Stock indexes                     Latest     Daily %
 MSCI Emerging Markets                        1114.46     0.59
 MSCI LatAm                                   1864.52     0.55
 Brazil Bovespa                              95927.80     0.42
 Mexico IPC                                  37459.25     0.11
 Chile IPSA                                   3606.55     0.51
 Argentina MerVal                                0.00        0
 Colombia COLCAP                              1170.84    -0.31
              Currencies                    Latest     Daily %
 Brazil real                                   5.6244    -0.03
 Mexico peso                                  21.4325     0.10
 Chile peso                                     797.2    -0.25
 Colombia peso                                 3837.9     0.12
 Peru sol                                      3.5698    -0.03
 Argentina peso (interbank)                   77.0200     0.12
 Argentina peso (parallel)                        151     0.66

 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Alistair Bell)