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Bonds News

EMERGING MARKETS-Latam assets rise; Brazil's real steady ahead of expected rate cut

    * Brazil central bank seen cutting rates to record low of 2%
    * Most Latam currencies rise against weakening dollar 
    * Petrobras lifts Bovespa as oil prices jump

    By Shreyashi Sanyal
    Aug 5 (Reuters) - Most Latin American currencies rose
against a weaker dollar on Wednesday, while Brazil's real
remained steady ahead of what is expected to the central bank's
final interest rate cut in its one-year long easing cycle. 
    The real firmed 0.2% against the dollar as Copom, the
central bank's rate-setting committee, is set to cut its key
interest rate to a record low of 2.00% later in the day in a
final 25 basis points move to cushion an economic collapse. 
    The cut would be the ninth of an easing cycle that started a
year ago, as policymakers initially sought to boost the economy
in light of President Jair Bolsonaro's poor results in
attracting more investment at the beginning of his term.

    "Following the massive collapse in growth caused by COVID, 
the current economic indicators in Brazil are signaling an
economic recovery, but pre-crisis levels are still a long way
off," said Alexandra Bechtel, forex and emerging markets analyst
at Commerzbank. 
    "The bar is set high for further rate cuts, in particular as
more stable framework conditions (budget deficit etc.) would be
required for lower rate levels."
    Economic activity in Brazil contracted in July for a fifth
straight month, a survey of purchasing managers' activity
showed, a result of the dominant services sector still
struggling under the weight of the COVID-19 crisis.
    Mexico's peso rose for the first time in seven
sessions, gaining more than 1% as the greenback extended
declines after a U.S. coronavirus relief package stalled in
Congress.
    A jump in oil prices on a drop in U.S. crude inventories,
also supported the Mexican peso as well as oil-exporter
Colombia's peso.    
    Even as Latin American assets recovered sharply from March
lows, a bounce back to pre-pandemic levels is yet to happen.
Economists at Scotiabank say it will take several quarters to
return to pre-COVID-19 levels of economic activity even with
strong growth into 2021. 
    Stocks in the region outperformed emerging market peers,
with MSCI's gauge for Latin American equities
surging 2.7%. 
    Brazil's Bovespa led the gains with a 2% rise, as
energy company Petrobras jumping more than 6%,
tracking higher crude prices. 
    Mexican stocks added 1.2%, as mining company
Industrias Peñoles, one of the world's largest
silver producers, soared 11% on rising prices of precious
metals.   
    Argentina's peso was rangebound a day after
reaching an agreement with creditors to restructure around $65
billion in sovereign debt. 
    Key Latin American stock indexes and currencies:
    
  Stock indexes               Latest         Daily % change
 MSCI Emerging Markets             1102.65               1.2
                                            
 MSCI LatAm                        2055.45              2.66
                                            
 Brazil Bovespa                  103366.60              2.12
                                            
 Mexico IPC                       37844.48              1.01
                                            
 Chile IPSA                        3971.34              1.15
                                            
 Argentina MerVal                 53406.73             2.339
                                            
 Colombia COLCAP                   1143.23              1.31 Currencies              Latest         Daily % change
 Brazil real                        5.2748              0.16
                                            
 Mexico peso                       22.4322              0.96
                                            
 Chile peso                          776.2             -0.61
                                            
 Colombia peso                     3778.14              0.03
                                            
 Peru sol                           3.5447              0.17
                                            
 Argentina peso                    72.6100             -0.06
 (interbank)                                
                                            
 Argentina peso                        125              2.40
 (parallel)                                 
                                            
 

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