PERU: Further View On BCRP Rate Decision – Goldman Sachs Sees High Bar For Cuts
Dec-12 13:24
- After remaining on hold last night, as expected, the BCRP maintained a data dependent stance and gave no guidance on future decisions. As noted earlier, several analysts expect the BCRP to remain on hold ahead, although the door remains open to another cut, given the benign inflation backdrop.
- An additional view from Goldman Sachs is here, where they still see an unchanged policy rate for the foreseeable future:
- GS writes that they did not detect relevant new signals pointing to a shift in the monetary policy outlook, except some soft confirmation that the bar for cuts remains relatively high. First, the characterisation of domestic activity improved at the margin. Second, the medium-term risks to global growth no longer feature a downside skew.
- GS maintain their view that the policy rate is likely to remain at 4.25% for the foreseeable future, noting that there is limited urgency to either address inflationary pressures or stimulate economic growth.
- At the current juncture they do not think that the MPC intends to use the policy rate as an instrument to lean against recent FX appreciation. In their view, the PEN strengthening has been more directly influenced by record‑high terms of trade and trade in goods surplus than by the still tight interest rate differential with the Fed.
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SOFR OPTIONS: Morning Option trades
Nov-12 13:15
- SFRX5 96.18/96.31^^, traded half in 5k.
- SFRX5 96.25/96.12ps, traded 1.75 in 2k.
- SFRZ5 96.18/96.31/96.50/96.62c condor, traded 6 in 5k.
- SFRZ5 96.12/96.25/96.50/96.62c condor, traded 6.75 in 6k.
- SFRH6 96.37/96.25ps 1x2, traded half in 5k.
- 0QX5 97.12/97.06/96.87/96.75p condor, traded 5 in 5k.
STIR: UBS Recommend Receiving Dec FOMC On Softening Labor Market
Nov-12 13:12
Signs of a softening labor market (mostly via unofficial lower tier and alternative data) have been noted in recent weeks.
- As a result, UBS have recommended receiving December FOMC OIS “even at 16 bp”.
- They note that “CPI for October may not be published at all but expectations are that the September jobs report could arrive pretty quickly after the U.S. government reopens”. While their economists suggest that the September jobs data “could still be decent” they warn that “across the surveys, measures and details labor demand appears to have slowed sharply and by more than labor supply.”.
- They expect a Fed cut in December.
SONIA OPTIONS: Latest Option trades
Nov-12 13:08
- SFIH6 96.35/96.45/96.70/96.80 c condor, bought for 5.25 in 5k.
- SFIH6 96.55/96.45/96.35p ladder, bought for 1.5 in 4k.
