CHILE: Additional Analyst Views See Next BCCh Cut in December
- In line with the latest BCCh economist survey, additional analyst views post the BCCh rate decision see the rates remaining on hold at the next decision, and the next policy easing to take place in December, a stance that should prove supportive of the Chilean peso.
- *CIBC: While the newly informed BCCh stance is somewhat more cautious than CIBC had expected heading into yesterday’s decision, they maintain their forecast for two additional 25bps rate cuts before reaching a terminal rate of 4.25%. CIBC now expect these cuts to occur in December (previously October) and March 2026. CIBC anticipate that USDCLP will continue its downward trend toward the 950–960 range, following the central bank’s more patient forward guidance.
- *Scotiabank: Until the CLP better reflects the cyclical strength of the economy, a meaningful carry trade builds in favour of the peso, and the currency moves toward Scotiabank’s target of CLP 890 (post-first-round election), it will be difficult to see downside surprises in core inflation. Consequently, Scotia maintain their expectation for the next rate cut to come only at the December meeting, and highly dependent on core inflation prints. Scotia expect that the new international scenario—with Fed cuts over the coming quarters, improved local political environment, and copper strength—will eventually overcome the peso’s resistance and allow it to reflect its true value, despite the central bank’s ongoing reserve accumulation process.
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US TSYS/OVERNIGHT REPO: Secured Rates Steady, Could Pick Up Later This Week
Secured rates were steady Friday, with SOFR remaining at 4.35%.
- Rates are expected to print the same or perhaps slightly lower Monday. However pressure could pick up later in the week on Treasury auction settlements. These include $55B in net cash raised by bills on Tuesday and a further $42B on Thursday, followed by $35B in coupon settlements Friday.
- The effective Fed funds rate remains steady at 4.33%.
REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 4.35%, no change, $2817B
* Broad General Collateral Rate (BGCR): 4.33%, no change, $1169B
* Tri-Party General Collateral Rate (TGCR): 4.33%, no change, $1139B
New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 4.33%, no change, volume: $115B
* Daily Overnight Bank Funding Rate: 4.33%, no change, volume: $262B
US: Trump Press Conference On Washington DC Law Enforcement Underway
US President Donald Trump’s White House press conference, announcing expanded federal law enforcement in Washington, DC, is underway. LIVESTREAM
- As reported earlier, Trump has invoked the 'Homerule Act' to place the DC police department under direct federal control. He also announces the deployment of the National Guard to Washington DC to “reestablish law, order, and public safety.”
- Trump is likely to take questions from reporters at the conclusion of the law enforcement portion of his press conference. There will be considerable market focus on any comments related to the August 15 summit in Alaska with Russian President Vladimir Putin.
- Trump may also address questions on a pending US-China tariff and export control pause that will expire tomorrow without Trump's endorsement of an additional 90-day pause.
STIR: Euribor Futures Inching Lower; ERH6 Support In View
Euribor futures continue to inch lower on weak volumes. Today’s headline and regional data flow has been light, with weakness over the past five sessions seemingly a gradual reassessment of market’s ECB terminal rate expectations. Although the median analyst still sees one more ECB rate cut this year, a solid minority see rates on hold at 2.00% going forward and this view is slowly bleeding into market pricing.
- ERH6 is -1.5 ticks at 98.110. The August 1 low (i.e. pre the US labour market report) at 98.095 provides initial support.
- Weakness in EUR STIRs is in turn dragging Schatz futures to session lows. DUU5 is -2.5 ticks at 107.025, with key support and the bear trigger defined at 107.010, the Jul 25 low.
- Tomorrow’s regional calendar includes the German August ZEW survey. Meanwhile, spillover form the UK labour market report will also be eyed in the morning.
