May 15, 2018 / 4:19 PM / 9 days ago

EMERGING MARKETS-LatAm currencies extend selloff as U.S. bond yields spike

    By Bruno Federowski
    BRASILIA, May 15 (Reuters) - Latin American currencies
extended their selloff on Tuesday as data showing an increase in
U.S. retail sales bumped up 10-year Treasury yields to their
highest in seven years, curbing demand for high-yielding
emerging markets assets.
    The benchmark government yield reached a high of
3.058 percent, blowing through the key psychological level of 3
percent it hit in late April for the first time in four years. 
    The move came in the wake of a 0.3 percent rise in U.S.
retail sales last month, which although small suggested consumer
spending is on track to accelerate after slowing sharply in the
first quarter.
    Along with accelerating inflation and a widening fiscal
deficit, that increased bets that the Federal Reserve might
increase interest rates by more than expected, something that
has driven a global emerging market selloff in recent weeks.
    "It looks like there's no limit to how high the dollar can
go. The market has been in panic mode in the last few weeks and
the only thing we can do is sit and watch," a portfolio manager
at a Rio de Janeiro-based asset management firm said.
    The Brazilian real weakened 1.2 percent to its lowest
in two years, while the Mexican peso touched a one-year
low.
    Both currencies were also pressured by local issues, with
Brazil headed to its hardest-to-predict elections in decades and
Mexico struggling to close a deal with the United States and
Canada to renew the North American Free Trade Agreement.

    But the Argentine peso, which has been by far the biggest
loser in the region this year, traded flat after the country's
central bank offered to sell up to $5 billion in a bid to stop
the currency's slide.
    Argentina requested a "high access stand-by arrangement"
from the International Monetary Fund last week after the peso
depreciated rapidly, prompting the central bank to start selling
reserves and hike interest rates.
    
    Key Latin American stock indexes and currencies at 1600 GMT:
 Stock indexes                            daily %    YTD %
                                           change   change
                               Latest              
 MSCI Emerging Markets           1148.86    -1.71      0.9
                                                   
 Brazil Bovespa                 85019.57    -0.25    11.28
 Mexico IPC                     46080.34    -0.94    -6.63
 Chile IPSA                      5679.44    -0.29     2.06
                                                   
 Chile IGPA                     28717.24    -0.23     2.63
                                                          
 Currencies                               daily %    YTD %
                                           change   change
                                  Latest           
 Brazil real                      3.6708    -1.18    -9.74
                                                   
 Mexico peso                     19.7400    -0.61    -0.21
                                                   
 Chile peso                       631.05    -0.99    -2.60
                                                   
 Colombia peso                   2882.51    -1.68     3.45
 Peru sol                           3.27    -0.40    -1.01
                                                   
 Argentina peso (interbank)      24.9975     0.01   -25.59
                                                   
 Argentina peso (parallel)          25.2     6.35   -23.69
                                                   
 
 (Reporting by Bruno Federowski, Editing by Rosalba O'Brien)
  
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below