[Politics] Boric's Chinese headaches: balls of steel and vaccines

[FNX Magokiler]

Good and happy Thursday! All the market's attention is focused on the Monetary Policy Meeting (RPM) of the Central Bank and the decision it announces this afternoon. In the market they anticipate that the consensus is still that the Council decides on a 75bp cut, although the rise of the dollar and the greater external risk has some economists saying that it would not be a surprise if the cut is more moderate and that the BC send a signal that they will pause the rate lowering rate for the rest of the year.

LarrainVial told its clients that today's cut will be only 50 basis points – from 9.50% to 9.00% – and the focus will be on the bias of the statement. His analysis is based in part on the fact that the economy is rebounding. “We expect a significantly positive seasonally adjusted IMACEC in September compared to August (…), these signs of reactivation of the economy would be led by internal demand and would validate a GDP growth of 0% or perhaps something more in this year 2023.”
The Council is more complicated than anticipated a few weeks ago. The rise of the dollar brings inflationary pressures. JP Morgan is one of the banks that believe that the issuing entity should pause its reserve accumulation program, in a context of stricter global financial conditions, particularly interest rates in USA. In recent weeks, US 10-year debt rates hit their highest level since 2006 and the impact is being felt around the world.
The meeting of the Council of the Central Bank occurs in the midst of the nervousness of the debt market regarding the bond placements by the Government.

 

 

The Minister of Finance announced it in an interview with us and, two days later, he surprised the market with simultaneous sales of bonds abroad and in the local market, for the equivalent of US$ 900 million. Bloomberg warned that analysts questioned the timing chosen to do so, as well as the amount, and warn that it caused heavy losses in peso instruments in the local market.

To this we must add that this Thursday it made another issue in pesos at a rate of 7%. All this in the midst of the stalled talks for a fiscal pact and S&P's warning about the economic impact of the lack of political agreements.
Bloomberg analysis warns that there is fear in the market “that the wave of Treasury debt issues will shake up the local fixed income market. Losses are expected in mutual funds, the AFP E fund and a jump in mortgage loan rates.”
Also in this edition of El Semanal Exprés: balls of steel, Huachipato and vaccines, the Chinese headaches that plague La Moneda and the Ministry of Economy in particular. A former diplomat says that these two cases are examples of the type of political dilemmas that will become increasingly frequent due to the economic importance that China and its investments have in the country. He recommends pragmatism and a cool head.

In addition, the CMF confirms that Chilean mutual funds are expensive; Videla makes a mea culpa for the crisis that affects the board of directors of Cencosud; and Wall Street changes its mood about inclusive and sustainable investing (ESG).

 

https://www.elmostrador.cl/el-semanal/2023/10/26/los-dolores-de-cabeza-chinos-de-boric-bolas-de-acero-y-vacunas/