COLOMBIA: Peso Continues Slide Lower, BanRep Decision Awaited
Oct-31 2024 12:39
- USDCOP rose 0.66% on Wednesday, extending the rally from the October highs to 6.3%. The continued slide for the peso has recently been assisted by the Senate voting to approve a constitutional reform aimed at increasing government transfers to regional authorities. The bote ignores several warnings that the bill may be fiscally unsustainable.
- While analysts are divided between whether BanRep will opt to continue with its 50bp easing pace in October or deliver a larger 75bp cut of the overnight lending rate, the recent swing for the peso should bolster the likelihood that the central bank opts for the more cautious move.
- Recent central bank rhetoric also suggests that the cautious stance may prevail amid mounting fiscal concerns, and this is corroborated by the median surveyed estimate forecasting a 50bp move.
- However, last month’s close vote split, and latest BanRep survey data suggest that the decision is by no means set in stone. The full MNI preview with analyst views is here: https://mni.marketnews.com/48p7Hrq
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STIR: Powell Reiterating No Hurry To cut Continues To Weigh
Oct-01 2024 12:38
- Fed Funds implied rates have been reluctant to pare yesterday’s two-step increase from initially spillover to German regional CPI before Fed Chair Powell’s comments to NABE.
- Cumulative cuts from 4.83% effective: 36bp Nov, 72bp Dec, 102bp Jan and 165bp June.
- Whilst the rhetoric from Powell’s comments were similar to the FOMC press conference when he cautioned against assuming the same cadence of rate cuts ahead after 50bp on Sep 18, the explicitness of "this is not a committee that feels like it's in a hurry to cut rates quickly” continues to weigh.
- The market still sees large odds of a 50bp cut in Nov with sensitivity to any further labor market softening. The Fed sees the unemployment rate ending the year at 4.4% but with then no further increases as of end-2025, dialling up sensitivity to any rise in Friday’s NFP report from the 4.22% as of August.
- Powell talking on the potential steadiness of a rate cutting cycle and last week’s strong data (which as we noted ruled out a downside risk as GDI was revised up strongly) have seen implied meeting rates from March onwards higher than before the Sept FOMC decision.
EURIBOR OPTIONS: ERZ4 Call Spread Bought, ERV4 Upside Liquidated
Oct-01 2024 12:36
A couple of rounds of recent flow:
- ERV4 97.25 call 8.7K given at 0.5, looks like liquidation
- ERZ4 97.25/97.37 call spread paper paid 2.5 on 10K. ERZ4 last 97.175
MNI POLITICAL RISK - Vance And Walz Face Off In Veep Debate
Oct-01 2024 12:31
Executive summary:
- Governor Tim Walz (D-MN) and Senator JD Vance (R-OH) will meet this evening for an unusually high-profile vice-presidential debate. With Biden’s exit from the race and Trump’s refusal to commit to a second debate with Vice President Kamala Harris, tonight’s encounter will likely be the last opportunity for voters to see the two tickets in action on the debate stage.
- The prevailing view is that Vance has more to gain from the debate. His favourability rating is lower than Walz’s and his campaign has been littered with high-profile gaffs and ‘extreme’ statements that have turned off some independent voters.
- Thousands of portworkers downed tools overnight, initiating a strike that risks a new round of supply chain shocks. The White House said in a statement: “Our supply chains and our economy are more resilient than they were when we came into office.”
- The Biden administration issued new regulations yesterday to ensure executive orders on border security will remain in place beyond the presidential election.
- Biden will visit storm-ravaged North Carolina on Wednesday and hinted at recalling Congress to pass an emergency supplemental spending bill.
- The top Republican tax writer in the House rejected Trump’s pledge to eliminate the SALT cap.
- The IDF criticised the US for 'leaking' intelligence on Israeli ground operation in Lebanon.
- Poll of the Day: Key issues dominating the presidential election may only have a 'minimal impact' on how Americans vote.
Please find the full article attached below: US Daily Brief
