CHILE: CLP Buoyed By Prospect Of Higher Neutral Rate Estimate
Sep-26 13:57
- The Chilean peso continues to slightly outperform today, buoyed by today’s BCCh minutes, which emphasised the Board’s concerns about higher-then-expected core inflation and also raised the prospect of a higher neutral rate estimate.
- Several members now explicitly acknowledge that the neutral rate it likely to be in the upper half of the estimated 3.5-4.5% range. In this context, and with core inflation tracking above its projections, the only option was to keep the policy rate at 4.75% at the Sep 9 meeting.
- The Board reaffirmed its intention for the policy rate to converge towards its neutral level ahead, but the prospect of a higher neutral rate estimate means that this may only equate to one or two further 25bp cuts in the coming quarters.
- Santander says that “while the continuation of the cut cycle is not ruled out, its pace will depend on whether underlying inflation or its fundamentals show signs of slowing.” They maintain their baseline scenario for the next cut in December, which is consistent with consensus expectations in the latest BCCh economist survey.
- For USDCLP, the recent breach of a key support at 949.84, the Aug 13 low, undermines the medium-term bullish theme, with scope seen for a move towards the 940.00 handle. On the upside, initial firm resistance at 958.77, the 20-day EMA, has been pierced. A clear break above it would be a bullish development and open 977.57, the Sep 2 high.
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ESM ISSUANCE: USD2bln WNG New 5-Year: Allocations Out
Aug-27 13:54
- USD2bln WNG of the new 5-year Sep-30 ESM-Bond
- Spread set earlier at SOFR MS+39 (SA 30/360) (guidance was SOFR+40 Area, IPT was MS+42 area, that was equiv. to CT5 + ~7.3bp)
- Books closed in excess of $13.3bn excl. JLM interest
- Issuer: European Stability Mechanism (TICKER: ESM)
- Issuer Ratings: Aaa (stable) (Moody's) / AAA (stable) (S&P) / AAA (stable) (Fitch)/ AAA (stable) (Scope)
- Format: Registered Notes, Reg S (NSS) / 144A
- Ranking: Senior, Unsecured, Unsubordinated
- Listing: Luxembourg
- Settlement: 4 September 2025 (T+6 (TARGET) / T+5 (NY))
- Maturity Date: 4 September 2030 (5Y)
- HR 101% vs CT5 (T 3 ⅞ 07/31/30 )
- ISIN: Reg S: XS3171756128 / 144A: US29881WAG78
- Coupon: Fixed, Semi-annual, 30/360, Following, Unadjusted
- Bookrunners: CACIB(DM/B&D) / DB / JPM
- Timing: Hedge deadline 15.30CET / 14.30UKT / 9.30EST
From market source and Bloomberg.
The transaction comes ahead of a USD3bln redemption for the ESM in September. That line also had a 5-year maturity initially.
EURUSD TECHS: Pierces Pivot Support At The 50-Day EMA
Aug-27 13:46
- RES 4: 1.1851 High Sep 10 2021
- RES 3: 1.1829 High Jul 01 and the bull trigger
- RES 2: 1.1789 High Jul 24
- RES 1: 1.1743 High Aug 22
- PRICE: 1.1586 @ 14:43 BST Aug 27
- SUP 1: 1.1574/1.1528 Intraday low / Low Aug 5
- SUP 2: 1.1392 Low Aug 1 and bear trigger
- SUP 3: 1.1373 Low Jun 10
- SUP 4: 1.1313 Low May 30
The trend set-up in EURUSD remains bullish and short-term weakness is for now considered corrective. However, the pair is trading lower today and has pierced key support at the 50-day EMA, at 1.1599. A clear break of the average would signal scope for a deeper retracement and potentially expose key M/T support at 1.1392, the Aug 1 low. For bulls, a resumption of gains would open key resistance and the bull trigger at 1.1829, the Jul 1 high.
US TSY FUTURES: BLOCK: Dec'25 2Y Sale
Aug-27 13:45
- -5,000 TUZ5 104-07, post time bid at 0937:01ET, 104-07.12 last -0.5)
