CHILE: Itaú Still Sees No Rate Cuts This Year, Risk Of Hike
Feb-12 18:55
- Itaú says that today’s BCCh minutes confirmed their expectation that holding rates was the only option considered in January, while the hawkish communication will likely eliminate expectations of further cuts this year which are still incorporated in the central bank survey data.
- The evolution of two-year inflation expectations was the key focus of the meeting. The Board considered it premature to establish whether the increase of the two-year CPI outlook would have an impact in inflationary persistence, but it was a warning sign that could not be ignored.
- With ex-ante real rates already around neutral levels, Itaú believes staying on a more cautious path – with no rate cuts this year vs the near 4% year-end rate signalled in the December IpoM - is the most beneficial in terms of consolidating an inflation convergence path towards the 3% target over the policy horizon.
- While not Itaú’s base case, they cannot discard the next move being a hike if inflation expectations deteriorate. Nevertheless, they still see most of CPI pressures stemming from transitory supply adjustments that will likely begin normalising during H2 2025 and soften medium-term expectations.
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STIR: FED Reverse Repo Operation
Jan-13 18:45
RRP usage inches up to $183.669B this afternoon from $178.800B on Friday. Compares to $98.356B on Friday, December 20 - the lowest level since mid-April 2021. The number of counterparties rises to 51 from 48.
US: NATO Approval Of US Leadership Fragile Despite Biden's Multilateralism
Jan-13 18:21
A new survey from Gallup has found that the reputation of US leadership remains fragile, across NATO member countries, despite US President Joe Biden’s attempt to shore up the transatlantic partnership.
- Gallup: “In the last year of Biden’s presidency, the median approval of U.S. leadership across NATO’s 30 member countries was 35%, the lowest of his term. Median disapproval was 51%, the highest of his term.
- “Historically, these ratings were still relatively better than those under Trump or during George W. Bush’s last two years in office. However, ratings under Biden were worse than those during most of the Barack Obama administration, when approval averaged 46% and disapproval averaged 26%.”
- The survey suggests, ahead of Trump's return to the White House on January 20, that Biden's focus on multilateral foreign policy has not wholly repaired tensions within NATO, particularly regarding disagreements in policy towards the Middle East and Ukraine.
- The alliance will be tested further in the coming weeks, with Trump previewing a return to his hardline first-term rhetoric on alliance contributions, calling on NATO members to hit 5% of GDP in defence spending - more than double the current benchmark target.
Figure 1: Approval of the Leadership of the United States, NATO Member Countries
Source: Gallup
PIPELINE: Midday Corporate Bond Roundup: Issuance Picking Up
Jan-13 18:14
- Date $MM Issuer (Priced *, Launch #)
- 01/13 $2.5B #Standard Chartered $1B 4NC3 +105, $500M 4NC3 SOFR+124, $1B 11NC10 +143
- 01/13 $2B #Deere $1.25B 10Y +68, $750M 30Y +75
- 01/13 $1.5B #CBA 5Y SOFR+69
- 01/13 $1B *EBRD 5.5Y SOFR+42
- 01/13 $1B #Plains All American 10Y +120
- 01/13 $750M #Ares Strategic 7Y +175
