CHILE: BCCh IPoM Consistent With Slightly Faster Easing Pace
Jun-19 12:01
- Speaking yesterday, BCCh Governor Costa said that the central bank’s latest forecasts already take account of a 7% electricity tariff hike that is scheduled for July. Her comments came after the publication of the central bank’s June monetary policy report, where it trimmed its 2025 year-end CPI forecast to 3.7%, from 3.8%.
- In that report, the BCCh indicated that its central scenario is consistent with a slightly faster easing cycle compared to the March IPoM, with rate cuts possibly resuming at the next meeting in July. Global developments will remain key as to whether the central bank cuts in July or September, with analysts looking for 50-75bp of cuts by year-end. (See the MNI review here.)
- USDCLP edged up by 0.1% yesterday but remained within its recent 930-950 range. BBVA said that the IPoM did not add much, as it validated market pricing but left little room for more meaningful pricing adjustments for the time being. From a technical perspective, a bear threat remains present for USDCLP, with attention on 914.00, the Mar 18 low. Resistance to watch is 961.64, the Apr 30 high.
- In other news, Codelco said that it expects its Potrerillos smelter in Chile to be offline until the end of July, after it halted operations last week following a chimney collapse.
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SONIA: OPTIONS: SFIQ5 96.10/96.25/96.40 Call Fly Lifted
May-20 11:58
SFIQ5 96.10/96.25/96.40 call fly paper paid 2.5 on 6K.
US TSY FUTURES: June'25-September'25 Roll Update
May-20 11:56
The latest Tsy quarterly futures roll volumes from June'25 to September'25 below. Percentage complete only 5%-10% across the curve ahead the "First Notice" date on May 30. Current roll details:
- TUM5/TUU5 appr 6,600 from -8.88 to -8.62, -8.75 last, appr 5% complete
- FVM5/FVU5 appr 44,300 from -3.75 to -3.25, -3.5 last, appr 10% complete
- TYM5/TYU5 appr 25,300 from -1.75 to -1.0, -1.5 last, appr 7% complete
- UXYM5/UXYU5 appr 4,100 from 3.25 to 3.5, 3.5 last, appr 2% complete
- USM5/USU5 appr 1,400 from 10.25 to 10.75, 10.25 last, appr 5% complete
- WNM5/WNU5 appr 1,400 from 6.0 to 7.0, 6.25 last, appr 5% complete
- Reminder, June futures won't expire until next month: 10s, 30s and Ultras on June 18, 2s and 5s on June 30. June Tsy options, however, expire May 23.
STIR: Modest SONIA Weakness Noted; SFI/ER Z5 Spread Pierces 200bps
May-20 11:38
SONIA futures have come under some pressure over the last ~40 minutes, now underperforming Euribor and SOFR counterparts on the session. We haven’t seen a clear headline trigger for the weakness, which may instead represent a delayed assessment of Chief Economist Pill’s remarks earlier this morning (see above for our thoughts).
- Yesterday’s low of 96.220 has contained downside in SFI Z5 today, with the contract now -2.0 ticks at 96.225.
- That sees the Sonia/Euribor Z5 spread pierce 200bps for the first time since April 22, and before that April 3.
- MNI's preview of tomorrow's April UK inflation print will be released in due course.
- Eurozone headline and data flow has been relatively light. The hawkish-leaning Knot did not rule out a June ECB cut, but needs to see the June macroeconomic projections before making a decision.
- It’s likely that the ECB will revise its GDP and inflation projections lower relative to March, even after the recent reduction in US/China tariff rates.
- A reminder that the ECB’s March projections saw headline inflation at 2.3% in 2025 and 1.9% in 2026. In its Spring forecasts released yesterday, the EC projected 2025 inflation at 2.1% and 2026 at 1.7%. That provides an initial indication of where the ECB’s June forecasts might end up, assuming broadly similar methodologies across the EC and national central banks/the ECB.
