EM LATAM CREDIT: Colombia: May economic activity - Neutral

The Atlanta Fed’s Business Inflation Expectations survey for June (in-depth report, here) continued to show relatively modest impacts from US tariff policy. 

• Firms’ 1Y ahead inflation expectations, defined in the details as the mean change in expected unit costs over the next 12 months, fell to 2.42% in June from 2.54% in May.
• It’s down from a recent high of 2.76% in April (highest since Jul 2023) for the lowest since February but still a little above the 2.24% averaged in 2024 for context.
• The increase and subsequent pullback is more in keeping with a modest increase in consumer expectations from the NY Fed’s survey as opposed to the sharper climbs in the U.Mich survey and less so Conference Board survey.
• This release also sees the quarterly question for firms’ long-run unit cost inflation expectations 5-10Y ahead, with it unchanged at 2.8% from the March survey. It’s up from Q4 low of 2.6% (lowest since 3Q20) but has only increased back to the 2.8% averaged since the survey started in 2012 through 2019.
• The combination points to a more mellow uptick in inflation expectations compared to sharper increases in prices paid components of ISM manufacturing and services surveys as of May. 

• US TSY 8W BILL AUCTION: HIGH 4.470%(ALLOT 16.95%)
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