February 22, 2017 / 4:04 PM / 5 months ago

EMERGING MARKETS-Brazil rate futures flat as traders bet on 75 bp rate cut

4 Min Read

    By Bruno Federowski
    SAO PAULO, Feb 22 (Reuters) - Yields on Brazilian interest
rate futures were nearly unchanged on Wednesday as traders bet
the central bank would maintain its pace of rate cuts later in
the day.
    According to Reuters calculations, rate future yields
indicated an 85 percent probability of a 75 basis-point cut to
the benchmark Selic overnight lending rate, to 12.25 percent.

    Some investors had speculated the bank could increase the
pace of loosening to a brisk 100 basis points after several
months of slower-than-expected inflation.
    But a report on Tuesday showed the annual inflation rate
eased less than expected in mid-February, moderating those
expectations.
    Still, traders said the odds of a steeper cut at the central
bank's April meeting have been growing as Brazil's economic
recovery struggles to take hold.
    Traders also avoided making big bets ahead of the release of
the Federal Reserve's policy minutes, which could yield fresh
hints over the path of U.S. rate hikes.
    The Brazilian real strengthened 0.3 percent, while
the Chilean peso traded nearly flat. 
    Brazil's benchmark Bovespa stock index slipped 0.6
percent as traders digested a heavy batch of corporate updates.
    Shares in steelmaker Gerdau SA ranked among the
biggest losers after it reported a wider fourth-quarter net
loss.
    Lower iron ore futures also weighed on demand for the stock,
as well as on shares of miner Vale SA.
    
    Key Latin American stock indexes and currencies at 1550 GMT:
 Stock indexes                             daily %   YTD %
                                  Latest    change  change
 MSCI Emerging Markets             950.88     0.55    9.67
                                                    
 MSCI LatAm                       2679.14     0.56   13.83
                                                    
 Brazil Bovespa                  68524.09    -0.76   13.78
 Mexico IPC                      47353.92    -0.55    3.75
 Chile IPSA                       4375.73     0.05    5.40
                                                    
 Chile IGPA                      21872.80     0.05    5.49
 Argentina MerVal                19877.02    -0.97   17.49
                                                    
 Colombia IGBC                    9914.42    -0.53   -2.11
                                                    
 Venezuela IBC                   35127.14     0.12   10.79
                                                          
 Currencies                                daily %   YTD %
                                            change  change
                                   Latest           
 Brazil real                       3.0794     0.34    5.51
                                                    
 Mexico peso                      19.8765     0.70    4.36
                                                    
 Chile peso                         641.7    -0.09    4.52
                                                    
 Colombia peso                     2888.8     0.27    3.90
 Peru sol                           3.242     0.12    5.31
                                                    
 Argentina peso (interbank)       15.4700     0.84    2.62
                                                    
 Argentina peso (parallel)          16.23     1.17    3.64
                                                    
 

 (Reporting by Bruno Federowski; Editing by Meredith Mazzilli)
  

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