Bonds News

EMERGING MARKETS-Brazil's real, Mexican peso hit by tepid economic data

    * Mexican central bank meeting eyed for Thursday
    * Peruvian sol recovers from 18-year low
    * Brazil's real still set for strong recovery -analyst

 (New throughout, updates prices, market activity and comments)
    By Ambar Warrick and Shreyashi Sanyal
    Nov 11 (Reuters) - Brazil's real dipped on Wednesday after
retail sales came in weaker than expected, while most other
Latin American currencies retreated as investors focused on
prospects for a COVID-19 vaccine.
    The real fell as much as 0.6% even though data
showed September retail sales rose to a record high, up for the
fifth straight month. Still, the increase was the smallest in
months and only around half of what economists expected,
indicating stress from the pandemic on Latin America's largest
    Analysts did say Brazil's economic fundamentals were far
stronger than most other countries in emerging markets, and a
post-pandemic recovery for the real was due.
    "Given that the real is very cheap at current levels, we do
not think that a continued sell-off in the real at the rate
witnessed since the onset of the crisis is likely in the
long-term," said Matthew Ryan, senior market analyst at
financial services provider Ebury.
    "We are instead continuing to pencil in a recovery for the
currency against the dollar through to the end of 2021," he
    Ryan cited Brazil's strong foreign exchange reserves as a
reason to buy the real, along with low external debt and a
manageable current account deficit.
    While optimism over a potential vaccine spurred a rally in
emerging markets early this week, a continued rise in global
coronavirus cases and signs of the pandemic's economic fallout
saw markets retracing their steps. The U.S. dollar rose on
safe-haven demand.
    Mexico's peso fell 0.8% after industrial output was
flat in September - a sign that a fledgling recovery may be
    Investors also awaited a policy decision from the Mexican
central bank, which was expected to cut its benchmark interest
rate on Thursday. 
    "This week's meeting is a tough call and we certainly cannot
rule out a 25bp cut, indeed, MXN price action over the past week
arguably supports a decision to cut rates now rather than
waiting," said Christian Lawrence, senior cross-asset strategist
at Rabobank. 
    Losses in Chile's peso were limited by the prices of
copper, the country's top export, holding at a near 29-month
    Colombia's peso was supported by strength in the oil
    Peru's sol recovered slightly from an 18-year low
after Manuel Merino was sworn in as interim President of Peru on
Tuesday, following President Martin Vizcarra's ouster by
Congress a day earlier.

    Key Latin American stock indexes and currencies:
          Stock indexes                   Latest   Daily %
 MSCI Emerging Markets                    1178.00    -0.16
 MSCI LatAm                               2108.57    -0.63
 Brazil Bovespa                         104899.47    -0.16
 Mexico IPC                              40779.90     0.93
 Chile IPSA                               3973.58     -0.1
 Argentina MerVal                        51766.97     -0.1
 Colombia COLCAP                          1221.50     0.67
              Currencies                  Latest   Daily %
 Brazil real                               5.4133    -0.44
 Mexico peso                              20.5189    -1.00
 Chile peso                                 754.4     0.17
 Colombia peso                            3639.24    -0.32
 Peru sol                                  3.6218     0.02
 Argentina peso (interbank)               79.4800    -0.05
 Argentina peso (parallel)                    158    -5.70
 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
editing by Emelia Sithole-Matarise and David Gregorio)