BRAZIL: Strong day for BRL but as BRL was outperforming the region for so long, gains were low in comparison with the rest of the region moving up by 0.5% to close at 3.1822 after visiting as low as 3.1533. In the fixed income market the DI curve made a substantial adjustment after Wednesday Copom surprise decision to cut the Selic by 75bps to 13%, more than the market was expecting. Pricing for February meeting is now at 78bps, up from 66bps on Wednesday. Jan 18 was down 35bp to 11.00% and Jan 21 was down 34bp to 10.77% keeping the pricing of additional cuts in 2018. 5Y CDS was down 2bp to 254. Ibovespa rallied 2.6% to close at 64,036. November services volume was below expectations at 0.1%m/m, -4.6%y/y, with services to families (0.2%m/m, -5.6%y/y) and transports (2.1%m/m, -7.9%y/y) showing the largest downward influence.
MEXICO: MXN had a relief rally along with the global backdrop that considered that lack of negative news from the US Pres elect was good enough to stage a rally. DXY was down 0.4% and oil prices gained 1.45%. MXN gained only 0.25% to 21.8065 although it tested below 21.60. The Mbono/UST 10yr spread dropped 7bp to 524. 1y IRS was down 13p to 7.24%. 5y CDS was down 3bp to 172. MEXBOLSA gained 0.1% to 45,933. Banxico's Carstens suggested that there is no generalized rise in prices after uptick in gasoline prices.
ARGENTINA: ARS closed the day stronger by 0.25% at 15.812, following regional trends. Bonar 24 lost 0.64% to close at 116.125 while 5y CDS was down 8bp to 401. Merval dropped 1.7% to close at 18,468. Argentina tapped the market with a US$6bn repo loan with a spread of 290bps over Libor. Reo loan is guaranteed with Bonar 24 bonds and is part of the plan to tap the market by US$10bn.
CHILE: CLP was one of the main beneficiaries from the relief rally in the global market where DXY had a 0.4% downward correction that helped copper prices to rebound by 2.4%. 1y IRS was down 2bp to 2.96%, reflecting stronger CLP and keeping the view that the market is preparing for at least 2 rate cuts in 2017. 5Y CDS was down 1bp to 82. IPSA was up 0.85% to 4,210.
COLOMBIA: COP was the regional outperformer, gaining from both DXY sell off and oil prices surge. COP surged by 1.7% to close at 2924.16. 1Y IRS fell 1bps to 6.13%, as global risk aversion eased across the board. IGBC closed stronger by 0.27% at 10,286. 5y CDS dropped 2bp to close at 153.
PERU: PEN rallied (for Peruvian standards) by 0.53% to 3.3620, benefiting from global backdrop and allowing BCRP to remain outside the market. 1y NDF implied rate was up 2bp to close at 5.70%. 5y CDS was down by 1bp to 107. As market expected the BCRP left the reference rate unchanged at 4.25%