Brazilian Assets Lower on Announcement of Social Program


US stocks started off the week on a high as hopes for another stimulus package revived. The NASDAQ led gains, up 1.86% while the S&P and the DOW were up 1.61% and 1.50% respectively. Yield on 10Y USTs closed lower at 0.6528%.


Talks over a trade agreement between the UK and the EU continue on Tuesday even as strong opposition prevails over plans to introduce an internal market bill by the Brits. The UK sees the bill, which overrides elements of the Brexit divorce agreement signed in 2019, as a safeguard against “unreasonable behaviour” by the EU while the bloc sees it as “an extremely serious violation” of the 2019 agreement. The euro and the pound closed higher at $1.1666 and $1.2834.


The CSI rose 0.21% as the PBOC pledged to increase support for the economy by lowering rates in a mixed session in Asia on Tuesday. The NIKKEI also made 0.11% gains while the ASX closed unchanged despite trading higher earlier in the session; the HANG SENG slid 0.85%, however.


Turkey’s banking regulator, BDDK, lowered its asset ratio formula by 5 percentage points for lenders in a bid to slow lending – a second reduction in three months. The decision marks another step by authorities to unwind stimulus that had among other things widened the trade gap and pushed the lira to record lows. The BDDK move follows a 200bps increase in the benchmark rate by the CBRT at the last MPC meeting. The lira closed 1.85% weaker at 7.8062 to the dollar.


Brazilian assets were lower on Monday following an announcement by President Bolsonaro to revive a social programme known as Citizen Income. The announcement prompted fears among investors that the government’s austerity rules could come under threat as a result. The benchmark index, the IBOVESPA, closed 2.41% lower while the central bank had to step in to prop up the real which at some point had shed as much as 2%; the real eventually closed at 5.6624 to the dollar, 1.8% weaker.


ZAMBIN opened lower today continuing the recent trends ahead of a presentation to investors on Tuesday. A solicitation to defer interest payments followed by a downgrade by Fitch to C from CC has seen the bonds trade lower. The budget statement by Finance Minister Bwalya Ng’andu had little specifically touching on the Eurobonds situation and hopes are for greater clarity during the presentation. The kwacha closed weaker at 19.9940 to the dollar.