COLOMBIA: Jan CPI Inflation Due, BanRep’s Villar Says Restrictive Stance Needed
Feb-07 12:30
- CPI inflation figures for January will be released after market close, with analysts expecting a 0.81% m/m increase in the headline rate (vs. +0.46% in Dec), but with the annual inflation rate still moderating to 5.10% y/y, from 5.20% (2300GMT/1800ET). At the same time, core prices are seen rising by 0.79% m/m (vs. +0.44% previously), with the annual rate of core inflation declining to 5.41% y/y, from 5.65%.
- The data come after the publication of BanRep’s inflation report and latest MPC meeting minutes earlier this week, which revealed a sharp increase in the central bank’s 2025 CPI forecast to 4.1%, from 3.1%. Speaking at an event hosted by the BIS yesterday, BanRep Governor Villar said that a restrictive stance is needed to restore credibility and bring inflation back to target. Following the decision to pause the easing cycle last month, Villar reiterated that large fiscal imbalances are making it difficult to relax the monetary stance and that the minimum wage is set to pressure inflation.
- Separately, Grupo Vanti, Colombia's biggest natural gas distributor, said it will raise prices for homes and businesses by up to 36% from this month due to a fuel shortage. The shortage, which has been denied by Energy Minister Camacho, is forcing Colombia to rely on more expensive imported LNG.
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GILTS: Latest Trump Tariff Speculation Keeps The Pressure On
Jan-08 12:28
Pressure remains, with the latest media speculation surrounding Trump’s tariff preferences supporting the USD and weighing on bonds.
- That limits any recoveries.
- Futures as low as 90.27.
- Yields 6-10bp higher, 10- to 30-Year zone leads the move. 10-Year yields hits the highest level seen since ’08.
- Next level of upside interest in 10s the Oct ’08 monthly high (4.798%), highs of 4.792% seen so far.
- A break above there would expose the June ’08 monthly highs located at 4.862%, which protects the 5.00% level.
- 30s as high as 5.355%. August ’98 monthly high (5.397%) presents the next level of upside interest.
Fig. 1: UK 10-Year Yields
Source: MNI - Market News/Bloomberg
US DATA: Higher Long-End Rates Continue To Weigh On Mortgage Activity
Jan-08 12:27
- MBA composite mortgage applications extended their recent slide, albeit with a more modest -3.7% last week after a cumulative -22% in the two weeks prior covering the Christmas holiday period (all figures SA).
- Refis saw some very mild stabilization (+1.5% after a two week decline of -36%) with purchases instead leading the decline in the latest week (-6.6% after -13% over two weeks).
- It comes as 30Y mortgage rates have continued to churn higher, albeit by only 2bps in the latest week to 6.99%. It’s up from 6.67% in early Dec and a recent low of 6.13% in mid-Sep for its highest since July.
- Interestingly considering expectations of looser regulation under incoming President Trump, the regular-jumbo spread at exactly 0bps (from -16bps the previous week) reached its highest since Nov 2023. It is however just a single week and would need to see similar readings in weeks ahead to confirm this trend.
BONDS: German Yields are through the next resistances
Jan-08 12:20
- With German Bund through 131.59, the Yield is testing 2.55%, and further out would see 2.60% next, this equates to 131.06.
- We noted earlier the 127.82 support in UBH5, which equated to the November high for the 30yr Yield at 2.753%, this is now being tested, printing a 2.758% high, highest since early July.
- French OAT has broken below the 122.00 figured, and the 10yr Yield will now be targeting the 2024 high in Yield.
