Bonds News

EMERGING MARKETS-Mexican peso slides on record GDP contraction; Brazil's real outperforms

    * Coronavirus may cost Latin America and Caribbean a decade
    * Mexico's GDP falls to record 17.3% in second quarter
    * Brazil hits record 69,000 daily coronavirus cases  
    * Argentina may delay debt restructuring deadline amid

 (Updates prices)
    By Shreyashi Sanyal and Susan Mathew
    July 30 (Reuters) - Mexico's peso fell on Thursday after
data showed Latin America's second biggest economy contracted by
double digits in the second quarter, while a better economic
outlook for Brazil saw its currency outperform. 
    Preliminary figures from the INEGI national statistics
agency showed Mexico's gross domestic product shrank 17.3% in
the second quarter from the previous three months, the sharpest
drop on record. The peso weakened 0.5% against the
    With Mexico still struggling with its coronavirus outbreak,
and the U.S. recovery seemingly losing steam, the rebound in
Mexico's economy will be slow over the coming quarters, said
Nikhil Sanghani, assistant economist at Capital Economics.
    Sanghani also said the data bolsters bets for the Mexican
central bank to continue its easing cycle. "We expect a total of
100bp of further rate cuts this year, including a 50bp reduction
at the central bank's next meeting in August," he said.
    The dollar fell after U.S. President Donald Trump suggested
delaying presidential elections in November, adding to
uncertainty amid a historic contraction in U.S. economy in the
second quarter as the COVID-19 pandemic shattered consumer and
business spending.
    For Latin America, the coronavirus crisis could set back the
region and the Caribbean by a decade as countries endure
faltering economies and rising poverty, the U.N. economic
commission for the region and the World Health Organization
    While currencies in other parts of Latin America were firmly
in the red, Brazil's real rose 0.3% even as the country
set daily records on Wednesday for new COVID-19 cases and
     Brazil's Economy Ministry on Thursday lowered its 2020
public sector deficit and national debt outlook, reflecting a
less severe fall in the economy this year than previously
    The Colombian peso dropped as oil prices declined,
and as a Reuters poll showed Colombia's economy will have
suffered the worst contraction in its history in the second
quarter because of fallout from a coronavirus quarantine.

    In Argentina, the government is considering pushing back a
deadline for creditors to respond to its foreign debt
restructuring proposal until mid-to-late August, a source close
to the negotiations told Reuters on Wednesday.    
    The MSCI's Latin American stocks index fell
1.5%, with Brazil's Bovespa off 0.8% and Santiago shares
 off 1.4%.  
    Brazilian car rental company Localiza jumped
almost 11% after it said it expects profit margins to recover by
    Key Latin American stock indexes and currencies 1857 GMT: 
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1082.70    -0.36
 MSCI LatAm               2108.56     -1.1
 Brazil Bovespa         104899.78    -0.67
 Mexico IPC              37080.64     -1.7
 Chile IPSA               3952.68    -0.77
 Argentina MerVal        48479.88   -0.828
 Colombia COLCAP          1169.21    -0.49
      Currencies          Latest   Daily %
 Brazil real               5.1493     0.43
 Mexico peso              22.0790    -0.53
 Chile peso                 759.3    -0.34
 Colombia peso            3721.86    -0.46
 Peru sol                  3.5118    -0.40
 Argentina peso           72.2500    -0.07
 (Reporting by Shreyashi Sanyal in Bengaluru; editing by
Jonathan Oatis)