CHILE: BCCh’s Cespedes Says Inflation Increasingly Under Control
Jun-27 11:24
- BCCh Board member Luis Felipe Cespedes said that the central sees a set of factors coming together that will bring CPI inflation back to target early next year, according to an article on Bloomberg. Core inflation has slowed by more than expected, he said, and wage growth is gradually moderating, adding that were it not for the electricity tariff hikes, inflation would already be at the 3% target.
- His comments come after the recent monetary policy meeting, where the central bank struck a more dovish tone, sounding more comfortable about inflation risks. The minutes to that meeting will be scrutinised next week for further clues about the prospect for a resumption of the easing cycle, perhaps as soon as the July 29 MPC meeting.
- Also next week, activity data for May will be released, including retail sales, IP and copper production, as well as the latest IMACEC activity index.
- Meanwhile, Hacienda USD supply continues to be supportive of the Chilean peso, with the finance ministry selling another $150m yesterday, taking this month’s total to $1.05bn. USDCLP closed 0.6% lower at 931.7, towards the bottom of its recent range, with eyes on support at 914, the Mar 18 low.
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US DATA: Composite MBA Applications Dip As Swap Spread Re-Widens A Touch
May-28 11:13
- MBA composite mortgage applications dipped -1.2% last week (sa) after a heavier -5.1% the week prior.
- The breakdown was more mixed than usual, with new purchase applications rising 2.7% after -5.2% whilst refis saw further weakness with -7.1% after -5.0%.
- Relative levels: composite at 50% of 2019 average levels, new purchases at 63% and refis at 37%.
- The 30Y confirming mortgage rate increased 6bps to 6.98% as it started to reflect what has been a sharper climb in 10Y swap rates although one that fizzled out last week with no change in average rates for the latter.
- It saw the confirming rate to swap spread rise 6bps to 302bps having tightened 19bps from 3.15% to 2.96% in the first half of May.
BONDS: US and UK Roll pace (updated)
May-28 11:06
Roll pace Update, pretty much all done. All the Volume in US Treasuries is just spread related, and September is front Month.
- WNA: 86%%.
- USA: 87%.
- UXY: 81%.
- TYA: 82%.
- FVA: 82%.
- TUA: 81%.
- Gilt 95%.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Is Intact
May-28 11:04
- In the FI space, recent gains in Bund futures suggest the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. This week’s climb reinforces a bullish theme. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.
- A bear cycle in Gilt futures remains in play and last week’s move lower reinforces the bearish theme. The contract has recovered from its recent lows - gains are considered corrective and this is allowing a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.
