CHILE: Sell-Side Analysts Still See Scope For December BCCh Rate Cut
Oct-08 17:23
- The Chilean peso continues to outperform peers today, with USDCLP still hovering just above the 950 handle, around 0.85% lower on the session. Below here, sights are on support at 946.87, the Sep 16 low. Camara swap rates are also slightly outperforming, with yields down 1-3bp across the curve. As noted, the move followed today’s increase in CPI inflation which reinforce expectations that the BCCh will remain on hold this month. However, analysts note that the data were marginally below the central bank’s more hawkish estimates for core inflation, keeping the door open to a cut in December.
- Santander notes that compared to the scenario projected by the BCCh in its latest MPR, headline inflation is relatively in line with expectations, while core inflation - which was the Council's main concern - was around 0.1% point lower in the quarter. In Santander’s view, while they expect the BCCh to keep the policy rate unchanged this month, this result leaves room for a 25bp cut at the December meeting.
- Similarly, Itaú believes that the downside surprise in Q3 2025 relative to the BCCh’s implicit inflation forecast is not enough to warrant a cut later this month. Nevertheless, the Board is likely to discuss both maintaining and cutting 25bp, opening the door for a December cut if sequential core price pressures moderate.
- Meanwhile, Goldman Sachs also believes that the MPC guidance means that an October cut is unlikely. However, they remain constructive on the outlook for inflation and expect the central bank to resume rate cuts before the end of the year.
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FOREX: JPY Volatility in Focus, USD Index Tilts Weaker
Sep-08 17:10
- The Japanese yen was the main focus across G10 currency markets on Monday, following the resignation of PM Ishiba and the associated sharp initial negative reaction at the open. USDJPY gapped higher from last Friday’s close around 147.40, swiftly erasing the post payrolls decline to trade as high as 148.58. Resistance in USDJPY at 148.78, the Aug 22 high, remains intact for now.
- Thatcherite MP Sanae Takaichi is a front-runner among many opinion polls to takeover, having previously made clear her preference for easy monetary policy and a bigger role for fiscal spending - reminiscent of the Abenomics policy set from 2012 - 2020. Markets have subsequently calmed, and USDJPY tracks back towards 147.75 ahead of Tuesday’s APAC crossover.
- Overall, weaker-than-expected US employment data continues to keep the risks tilted towards the weaker dollar narrative, emphasised by the USD index spending today’s US session consolidating close to six-week lows. Associated strength in G10 has been led by the likes of AUD and NZD, while political risks in France may have contained the EURUSD price action somewhat.
- The NZDUSD (+0.65%) rally places a clear focus on 50-day EMA resistance (intersecting today at 0.5921), a breach of which would counter the most recent bearish theme. Furthermore, spot has also closed in on 0.5944, short-term trendline resistance drawn from the July 01 high. Further gains would target the August 13 high at 0.5996.
- Tuesday’s calendar will be centred around the preliminary annual payrolls benchmark revision, which is widely expected to imply large downward revisions to nonfarm payrolls growth through the twelve months to March 2025. SNB Chairman Schlegel will also participate in a fireside chat titled "Future-proofing central banks" at the BIS Innovation Summit, in Basel.
- Focus this week remains on the US inflation picture, with PPI and CPI prints due on Wednesday and Thursday respectively.
FRANCE: PM Bayrou Loses Confidence Vote As Expected
Sep-08 17:05
In headlines that were very much expected, PM Bayrou has lost a confidence vote in parliament.
"*FRENCH PREMIER BAYROU LOSES CONFIDENCE VOTE IN PARLIAMENT" - bbg
- France is “drowning in a tide of debt,” Bayrou told lawmakers Monday ahead of the vote. “You have the power to bring down the government but you don’t have the power to erase reality.”
- As noted earlier, French PM Francois Bayrou told the French National Assembly that lawmakers can vote "according to their conscience" today in a no-confidence vote that was expected to result in Bayrou being ousted.
- Betting markets lean slightly towards snap legislative elections, despite Macron ruling the option out and the risk of further gains for the far-right National Rally.
- Defence Minister Sebastien Lecornu is favoured to replace Bayrou if elections are not called.
PIPELINE: Corporate Bond Update: Guidance Updates
Sep-08 17:00
- Date $MM Issuer (Priced *, Launch #)
- 09/08 $2.05B NCL Corp $1.025B each: 5.25NC2, 8NC3
- 09/08 $2B #PIF 10Y +95
- 09/08 $2B #Home Depot $500M 3Y +30, $500M 5Y +45, $1B 10Y +63
- 09/08 $1.75B #Duke Energy $1B 10Y +95, $750M 30Y +103
- 09/08 $1.1B #Equitable America $300M 2Y +50, $300M 2Y SOFR+71, $500M 7Y +93
- 09/08 $750M #Westpac NZ 5Y +65
- 09/08 $500M #Puget Sound Energy WNG 30Y +88
- 09/08 $500M Millrose Properties 7NC3 65
- 09/08 $500M Antero Midstream 8NC3
- 09/08 $Benchmark Bank of Nova Scotia 3NC2 +55, 3NC2 SOFR+76, 6NC5 +77
- 09/08 $Benchmark Hewlett Packard 2Y +58, 3Y +70, 3Y SOFR, 5Y +85
- 09/08 $Benchmark Elevance 3Y +55, 7Y +80, +10Y +95, 30Y +110
- 09/08 $Benchmark Wells Fargo 4NC3 +62, 4NC3 FRN, 11NC10 +85
- 09/08 $Benchmark Capital One 6NC5 +92, 11NC10 +115
- 09/08 $Benchmark Ares Strategic Inc +3Y +160, +5Y +185
- 09/08 $Benchmark Virginia Electric 10 +87, 30Y +92
- 09/08 $Benchmark Danske Bank 6NC5 +85
- 09/08 $Benchmark Uber +5Y +60, 10Y +80
