Asia and early-Europe hours have been as uneventful as they get from a data or headlines standpoint as flows drive moves in markets. In some cases, these are paring Monday’s action and in others are extending—all with no rhyme or reason. The Asia-Europe crossover was the most active period of the overnight session with rates, the USD, and oil catching a bid, but outside of crude we’re sitting little changed across most asset classes, at writing. Today’s main G10 events are the UST’s auctions of USD39bn in 7s, USD44bn in 52wk, and USD70bn in 42d CMB and another parade of central bank speakers.
USTs are bear flattening and SPX futures are flat vs ~0.5% cheaper European cash indices. The USD is mixed but in a small 0.1/2% range of gains and losses where the MXN is flat after a 10-day winning streak ended yesterday on a marginal decline. The biggest movers are in commodities, as WTI/Brent’s rise of 1.3% claws back Monday weakness on an uncertain OPEC meeting on the 30th, while iron ore down 3% remains dragged by Chinese authorities jawboning prices lower and copper is flat to slightly firmer (note Peru’s Las Bambas mine workers begin strikes today).
The Latam day ahead has a single data release worth watching, Brazilian IPCA-15 inflation at 7ET. The median economist expects a 4.8% y/y print (from 5.1%) on a 0.3% m/m rise. This monthly gain would be below the average in the decade before the pandemic, while the y/y deceleration from 5.1% reflects a more a favourable base than that which lifted y/y prints in Aug–Oct. It’s unlikely that today’s data will move markets all that much considering the very clear guidance from the BCB that 50bps cuts are in store next month and in February; we simply need more data to judge meetings beyond that.
We’re also monitoring political developments in Peru. Yesterday, the country’s attorney general filed a constitutional claim against Pres Boluarte over her role in the death of protesters in early-2023. This complaint will now be reviewed by a congressional committee and if developments align would result in a trial against Boluarte. However, this would only be until after the end of her presidency given constitutional protections. It’s worth highlighting that, overnight on Monday, AG Benavides was herself accused by prosecutors of heading a corruption ring where investigations of lawmakers were dropped in exchange for appointments to key roles in Congress.
—Juan Manuel Herrera
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