Bonds News

EMERGING MARKETS-Latam currencies firm, Brazil's real gains after inflation data

    * Brazil central bank sees growth of 4% or more in 2021
    * Dollar firms as U.S. data signals improving economy
    * Latam equities slide after best day in three months
    * Chilean peso, Mexican peso among biggest FX decliners

 (Recasts throughout, adds comments)
    By Shreyashi Sanyal
    Sept 2 (Reuters) - The Brazilian real rose for the second
straight session on Wednesday as inflation data signaled a
stable post-pandemic economic recovery, while other major Latin
American currencies strengthened against the dollar.  
    The real firmed 0.4% after data showed factory gate
inflation rose at its fastest pace in July, driven by increasing
food costs and the price of oil and biofuels products.

    "The rebound in economic growth could help stabilize and
potentially move the real higher," said Ed Egilinsky, head of
alternative investments at Direxion.
    Egilinsky said the ability of the central bank to continue
to act as a potential backstop for the currency, along with the
government's decision on more fiscal stimulus beyond 2020 will
play a major role in the behavior of the real. 
    Brazil's President Jair Bolsonaro on Tuesday extended
payments for low-income Brazilians until the end of 2020, hit by
the economic fallout from the COVID-19 pandemic, a program that
has created tension with his finance team.
    A selloff in Brazil's currency has eased recently amid
stronger-than-expected macroeconomic data, including record
growth in manufacturing activity last month. 
    Central bank chief Roberto Campos Neto said on Wednesday
Latin America's biggest economy was on course to shrink by about
5% this year and grow by 4% or more in 2021, stressing the
importance of the government resuming its agenda of strict
fiscal discipline.    
    Chile's peso firmed by midday, a day after the
country's central bank softened its prediction for an economic
contraction in 2020 in the world's top copper producer.

    Chile's currency has bounced about 14% from its March lows
to trade near its January high of 749.93 to the dollar.
    By contrast, the Mexican peso is still about 15%
below its own pre-pandemic highs. On Wednesday, it eased another
0.2%, with President Andres Manuel Lopez Obrador saying the 2021
budget will call for spending on priority infrastructure and
will not raise taxes.
    The finance ministry is due to present the new budget next
    A basket of Latin American equities fell
0.7%, with declines led by bourses in Brazil and
Argentina. The Colombian stock index bucked
the trend to gain about 0.3%. 
    In other emerging markets, the Russian rouble slid
1.8% after German Chancellor Angela Merkel said Kremlin critic
Alexei Navalny was the victim of a murder attempt with the
Novichok nerve agent and that Russia must answer "difficult
    Key Latin American stock indexes and currencies at 1922 GMT:
          Stock indexes                   Latest   Daily %
 MSCI Emerging Markets                    1117.97    -0.18
 MSCI LatAm                               2003.00     -0.7
 Brazil Bovespa                         101240.44    -0.91
 Mexico IPC                              37110.90    -1.01
 Chile IPSA                               3815.17     1.66
 Argentina MerVal                        44996.03   -3.329
 Colombia COLCAP                          1258.93     0.25
              Currencies                  Latest   Daily %
 Brazil real                               5.3620     0.42
 Mexico peso                              21.7750     0.07
 Chile peso                                 770.8     0.05
 Colombia peso                               3656     0.37
 Peru sol                                  3.5348    -0.23
 Argentina peso (interbank)               74.3100    -0.08
 Argentina peso (parallel)                    130     2.31

 (Reporting by Shreyashi Sanyal and Sagarika Jaisinghani in
Bengaluru; Editing by Lisa Shumaker and Marguerita Choy)