By Daniel Bases
NEW YORK, Jan 9 (Reuters) - Emerging market assets traded
mixed on Friday after a dismal U.S. jobs report sent U.S.
Treasuries higher, lifting sovereign bonds.
Latin American stock markets, however, dropped along with
U.S. equities after the U.S. Labor Department reported a loss
of 524,000 jobs, somewhat less than analysts' expectations.
The data was largely discounted by investors after the
private-sector ADB Employment Services jobs report on Wednesday
indicated the employment picture would be much worse.
"The data today certainly has put a damper on things, but
following the very poor ADP report the market started to brace
itself for 650,000 (lost jobs) ... as a result there was a bit
of relief," said Nick Chamie, head of emerging market research
at RBC Capital Markets in Toronto.
"(Bonds) are doing even better than I would expect given
the current state of the U.S. equity markets. There is a
slightly better tone around emerging markets and it is being
reflected in the fact that external debt is holding up fairly
well," he said.
Yield spreads between emerging market sovereign bonds and
U.S. Treasuries widened just five basis points on Friday to 650
basis points, according to the JP Morgan Emerging Markets Bond
Index Plus 11EMJ.JPMEMBIPLUS.
However, benchmark issues from Brazil and Turkey, two
nations that issued new debt this week, were bid higher.
The rise in U.S. Treasuries on the grim U.S. data created
"upside automatic adjustment momentum to LatAm (debt) prices,"
said Enrique Alvarez, head of Latin American debt strategy at
IDEAglobal in New York.
Russia's benchmark 2030 bond also gained ground.
While no compromise has been reached between Russia and
Ukraine over the transport of natural gas, there is some
movement from the European Union toward finalizing details for
a monitoring program to allow the resumption of gas supplies to
Europe. (For details, click on [ID:nL8375958]).
Mexico's external bonds also rose, even after a dire
warning from Central Bank Governor Guillermo Ortiz, who said
the bank was "enormously" worried about the shrinking economy.
Analysts say he appeared to be laying the ground work for
the central bank to cut interest rates, which have held steady
at 8.25 percent since August. The next review for monetary
policy is Jan 16. (For details, click on [ID:nN09294386]).
"The more pronounced (the slowdown) becomes, the more the
risk that you are going to see the domestic factor filter back
into prices on the debt side ... We are very much focused on
economic growth data and how much pass-through is being felt,"
said Alvarez.
The Mexican peso was slightly higher, trading at 13.64 per
U.S. dollar MXN=MX01, a gain of just 0.04 percent, while
Mexican stocks fell 0.98 percent .MXX.
Brazil's real jumped 1.32 percent to 2.2720 per U.S. dollar
(BRBY). But benchmark Brazilian equities fell 0.97 percent to
41,582.94 .BVSP.
Chile's peso closed 1.87 percent firmer on expectations
that coordinated measures between the government and central
bank would bolster dollar inflows, while stocks closed up 0.57
percent at 2,500.08 .IPSA.
The peso firmed despite a deeper-than-expected 100 basis
point cut in the central bank's benchmark interest rate to 7.25
percent on Thursday, a move that would normally tend to
depreciate the local currency by making it a less attractive
investment.
The peso closed at 615.20/615.80 per U.S. dollar, compared
with Thursday's close of 626.80/627.30 CHILJCLP=CL.
MCSI's emerging markets stock index .MSCIEF fell 1.24
percent to 571.25.
(Additional reporting by Lisa Yulkowski and Froilan Romero in
Santiago; Editing by Dan Grebler)
