Bonds News

EMERGING MARKETS-Brazil's real slides as political uncertainty deepens

    * Brazil's Treasury Secretary Mansueto Almeida quits
    * Brazil's real falls more than 3% before retracing some
    * Chilean peso outperforms; govt announces $12 bln stimulus 
    * Argentina extends debt talks deadline to June 19

    By Susan Mathew
    June 15 (Reuters) - Brazil's real slumped more than 3% on
Monday as political uncertainty intensified after the
resignation of the country's treasury secretary, while Latin
American stocks fell on concerns of a slower economic recovery.
    Sentiment took a hit as Beijing implemented fresh curbs
after a surge in the number of COVID-19 cases while cases in the
United States continued to surge, signaling the global economy
could be in a prolonged state of economic distress. Downbeat
factory activity from China was the latest evidence.
    But regional stocks lifted off session lows as Wall Street
recovered to trade higher after the U.S. Federal Reserve's
decision to apply an indexing approach to its secondary market
corporate credit facility boosted investor confidence.
    Brazil's real, among the worst performing emerging
market currencies this year, fell more than 3% after Treasury
Secretary Mansueto Almeida, a key architect of fiscal policy
behind Economy Minister Paulo Guedes, said he would leave office
in August.
    This follows a series of ministerial resignations from
President Jair Bolsonaro's government since April, most of them
over differences with the president, and comes at time when the
novel coronavirus pandemic is roiling the nation. 
    "If his departure represents a change in the government's
economic policy, the risk of fiscal indiscipline may return and
worsen the 'Brazil risk' and outlook for long-term interest
rates," said Rafaela Vitoria, chief economist at Banco Inter in
Belo Horizonte.
    Sources told Reuters that Bruno Funchal, an official at
Brazil's Economy Ministry, is set to be named as Almeida's
    "Funchal is a good name for replacement indeed," said Wilson
Ferrarezi, an economist at TS Lombard, pointing to Funchal's
fiscal discipline demonstrated during his time as trade
secretary of Brazilian state Espírito Santo. "This is likely to
help cushion the negative effects of Almeida's resignation, but
the market does have a very high bar." 
    The real last traded 2% lower at 5.1466 to the dollar, while
Sao Paulo-listed stocks fell 0.2%.
    Chile's currency surged more than 1% despite falling
prices of its main export item, copper. The government over the
weekend announced a fresh, two-year, $12 billion citizen support
and economic stimulus package to overcome the effects of the
coronavirus outbreak.
    But as the number of COVID-19 cases surged, Chile´s
government said it would extend the existing state of
catastrophe for 90 days.
    Mexico's peso cut losses to trade flat, while stocks
 lost 0.7%. 
    Argentine and Colombian markets were closed for a holiday.
The Argentine government on Friday extended the deadline to
restructure around $65 billion in sovereign debt to at least
June 19.
    Key Latin American stock indexes and currencies at 1939 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets     969.01    -1.82
 MSCI LatAm               1934.10    -1.29
 Brazil Bovespa          92614.93    -0.19
 Mexico IPC              37467.07    -0.56
 Chile IPSA               3927.27    -1.37
      Currencies          Latest   Daily %
 Brazil real               5.1466    -2.00
 Mexico peso              22.2310    -0.05
 Chile peso                 786.4     0.90
 Peru sol                  3.4778    -0.38
 (Reporting by Susan Mathew in Bengaluru; additional reporting
by Jamie McGeever in Brasilia; editing by Jonathan Oatis)