PERU: BCRP Analyst Views – March 2023
Mar-09 17:08
- Goldman Sachs: Although the MPC stated that the Feb “pause” did not necessarily imply the end of the cycle, the bar to resume tightening is high, barring an incremental deterioration of the political and social backdrop that generates a negative shock to the capital account and the PEN, and an unexpected reacceleration of inflation that could dislocate expectations further.
- GS consider that the bar has not been reached given that: (1) the PEN appreciated ~2% against the USD since the Feb meeting; (2) social protests abated relative to Dec-22 and Jan-23; (3) inflation surprised to the downside for the second month in a row; (4) short-term inflation expectations shifted down; and (5) activity is softening.
- Itaú expect the BCRP to keep its policy rate unchanged at 7.75%, but to keep the doors open for additional monetary adjustments depending on the inflation dynamics. While their GDP growth forecasts for 2023 and 2024 remain at 1.8% and 2.5%, respectively, Itaú note that the more benign external scenario (stronger China growth and higher copper prices) is an upside risk, while the impact of political turmoil on activity is still unclear.
- Scotiabank: Inflation stabilized in February, marking two months below market expectations. The BCRP, like Scotiabank, projects a clear decline in inflation beginning in March, which will prompt the bank to likely continue with an unchanged reference rate at the 7.75% level established in February.
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US TSYS/SUPPLY: Preview Tsy 3Y Note Auction
Feb-07 17:08
Tsy futures trading ahead the $40B 3Y note auction (91282CGL9) at the top of the hour. WI is currently at 4.100%, 12.3bp cheap to last month's stop.
- January auction recap: Treasury futures saw modest bounce off lows after $40B 3Y note auction (91282CGE5) stopped through: 3.977% high yield vs. 4.000% WI; 2.84x bid-to-cover vs. 2.55x prior month.
- Indirect take-up to 69.54% vs. 61.71% prior; direct bidder take-up at 13.18% vs. 20.44% prior; primary dealer take-up 17.28% vs. 17.85%.
- Timing: The 3Y note sale results will available shortly after the competitive auctions closes at 1300ET.
LOOK AHEAD: Wednesday Data Calendar: More Fed Speakers, 10Y Note Auction
Feb-07 17:06
- US Data/Speaker Calendar (prior, estimate)
- Feb-8 0700 MBA Mortgage Applications
- Feb-8 0915 NY Fed Williams WSJ Live event
- Feb-8 0930 Fed Gov Cook moderated discussion
- Feb-8 1000 Fed VC Barr, Atl Fed Bostic, moderated disc
- Feb-8 1000 Wholesale Trade Sales MoM (-0.6%, -0.2%)
- Feb-8 1000 Wholesale Inventories MoM (0.1%, 0.1%)
- Feb-8 1130 US Tsy $36B 17W Bill auction
- Feb-8 1230 MN Fed Kashkari Boston Economic Club event
- Feb-8 1300 US Tsy $36B 10Y Note auction (91282CGM7)
- Feb-8 1345 Fed Gov Waller, economic outlook
FRANCE: Macron Still Faces Risks To Pension Reforms Despite Low Protest Numbers
Feb-07 17:03
Mujtaba Rahman at Eurasia Group on French strikes regarding pension reforms, edited comments below:
- "A third day of action/inaction against pension reform in France today was much feebler than its predecessors. Numbers striking and marching in the streets fell well below the first protests on 19 and 31 Jan. Good news for President Macron? Maybe. [...] BUT There is another day of strikes and marches on Saturday [...]. Another poor turnout and the momentum of protest may deflate."
- "That would help Macron and his PM Elisabeth Borne in parliament where they face screeching left and far right opposition to their attempts to raise the official pension age from 62 to 64 by 2030 [...] A 1st reading of pension reform is supposed to be guillotined through Assembly (lower house) by the end of next week."
- "The big street protests have given cold feet to some of Macron’s own centrist supporters and encouraged mischief-making among their on/off centre-right allies. As things stand, Macron and Borne still just about have the 289 votes they need but could yet lose key amendments which will hobble their legislation. A big turn out today would have made their parliamentary battle harder. All eyes now turn to Saturday."
