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Bonds News

EMERGING MARKETS-Latam FX and stocks extend gains, eye best week in five months

    * Latam stocks set for best week in five months 
    * Brazilian real outperforms Latam peers for the week
    * Oil-linked currencies make hefty gains during the week

 (Adds details, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    Nov 6 (Reuters) - Latin American currencies and stocks
extended a near week-long rally on Friday, benefiting from an
upbeat mood in emerging markets as the prospect of static U.S.
fiscal policy pointed to increased interest in high-yield
markets.  
    Mexico's peso and several Asian currencies - which
are expected to benefit from less adversarial U.S. trade
policies - gained substantially through the week as Democrat Joe
Biden took the lead in the U.S. presidential race, while the
Senate leaned towards the Republicans.
    The peso, which was particularly hit by the Trump
administration's hard line on trade and drive to keep jobs in
America, rose 0.5% on Friday, and was set to rise 2.8% this
week. 
    The MSCI's index for emerging market stocks and
its Latin American counterpart were set for
their best weekly gains in five months. The Latam stocks index
is up 11.6% this week. 
    The MSCI's index of Latin American currencies
 was also set for its best week since early-June.
    Brazil's real led gains across Latam for the
day, adding 2.4% after gaining sharply in the last two sessions.
The currency was set to add more than 5% for the week,
outperforming its Latin American peers. 
    The real was buoyed by general optimism in emerging markets
about a Biden victory and encouraging data from its industrial
and services sectors through the week. 
    "Despite the fact that Biden becoming President would not
necessarily be beneficial for Brazil, as the Brazilian President
Jair Bolsonaro considers himself an ally of Donald Trump...  for
now the move in USD-BRL is dominated by general market
sentiment," said You-Na Park-Heger, FX and emerging markets
analyst at Commerzbank.
    The prospect of a Republican-led U.S. Senate saw investors
betting on fiscal policy staying largely static. Liquidity-heavy
government policies are expected to weigh on the U.S. dollar and
treasuries in the mid-term, making emerging markets an enticing
prospect for high yield seekers. 
    The more bonds the Fed buys, the more it tends to trickle to
higher-yielding markets such as Mexico, Indonesia or
South Africa.
    A jump in commodity prices recently, including oil, has
helped the currencies of Colombia and Russia. The
Russian rouble is, however, expected to weaken if Trump loses
the presidency.      
    But concerns over the fiscal damage of the coronavirus
pandemic still persisted, given that several emerging economies
were under pressure even before the outbreak.
    Turkey's lira notched its tenth straight week of
losses as dwindling foreign exchange reserves and insufficient
central bank actions weighed. 
    Key Latin American stock indexes and currencies:
    
                              Latest       Daily % change
 MSCI Emerging Markets         1175.78                  0.82
                                        
 MSCI LatAm                    2017.90                  1.81
                                        
 Brazil Bovespa              100626.29                 -0.12
                                        
 Mexico IPC                   38616.29                  0.57
                                        
 Chile IPSA                    3785.35                   2.2
                                        
 Argentina MerVal             48250.46                -0.517
                                        
 Colombia COLCAP               1161.80                 -0.11 Currencies             Latest       Daily % change
 Brazil real                    5.4167                  2.36
                                        
 Mexico peso                   20.5750                  0.46
                                        
 Chile peso                      752.2                  0.49
                                        
 Colombia peso                 3720.75                  0.83
 Peru sol                       3.5907                  0.08
                                        
 Argentina peso                79.0900                 -0.08
 (interbank)                            
                                        
 
 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Emelia
Sithole-Matarise and Andrew Heavens)
  
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