By Bruno Federowski
SAO PAULO, April 13 Yields on Brazilian interest
rate futures were flat on Thursday after the central bank cut
rates by an expected 100 basis points but refrained from
signaling a steeper reduction ahead.
In a unanimous vote, the bank agreed on the deepest cut in
nearly eight years, bringing the overnight Selic lending rate to
an almost two-year low of 11.25 percent.
Despite calls from some politicians and business leaders for
the central bank to be even more aggressive, the policy
statement announcing the decision suggested it would keep the
current pace of cuts for now.
JPMorgan economists wrote in a note to clients: "At the
current juncture, we keep our call for another 100bp cut at the
May meeting, followed by one cut of 75 basis points in July and
a final 50 basis-point cut in September."
Rate future yields indicated an 80 percent probability of a
100 basis-point cut in May, with a 20 percent chance of a 125
basis point reduction, traders said.
The Brazilian real firmed 0.4 percent, tracking other
Latin American currencies higher after U.S. President Donald
Trump said that the U.S. dollar was getting too strong and he
would prefer the Federal Reserve to keep interest rates low.
Brazil's benchmark Bovespa stock index, however, was
Shares of planemaker Embraer SA fell 2.6 percent,
leading losses on the index, after disappointing first-quarter
delivery figures. Analysts at Morgan Stanley Securities cut the
price target on U.S.-listed Embraer shares to $23 from
Key Latin American stock indexes and currencies at 1500 GMT:
Stock indexes daily % YTD %
Latest change change
MSCI Emerging Markets 963.86 0.59 11.13
MSCI LatAm 2633.66 0.87 11.54
Brazil Bovespa 63920.55 0.05 6.13
Mexico IPC 48955.82 -1.37 7.26
Chile IPSA 4863.18 -0.02 17.15
Chile IGPA 24373.17 -0.01 17.55
Argentina MerVal 20812.17 -0.86 23.02
Colombia IGBC 10250.56 0.22 1.21
Venezuela IBC 47030.02 0.47 48.34
Currencies daily % YTD %
Brazil real 3.1195 0.41 4.16
Mexico peso 18.5175 0.15 12.02
Chile peso 648.4 0.48 3.44
Colombia peso 2869.25 -0.07 4.61
Peru sol 3.254 0.00 4.92
Argentina peso (interbank) 15.1700 0.66 4.65
Argentina peso (parallel) 15.64 0.32 7.54
(Reporting by Bruno Federowski; Editing by Dan Grebler)