Halister News

(Bloomberg) -- It’s important for Brazil govt to keep this discussion alive, but the timeline for a possible pension reform in 2017 is "challenging, to say the least," XP Gestao Multimarket Funds Manager Bruno Marques says by phone.

• Chances of the pension reform actually happening this year are very low, since govt will probably be focused on charges against president Temer until early November, and then it will have very little time to negotiate a possible reform
• "Govt would need to raise many more votes than it has achieved so far in other discussios, such as in TLP long term rate and the charges," Marques says
  • "Govt would have to bring together a majority that it didn’t have even in better scenarios in the past,"
• NOTE: Estado reported earlier that lawmakers want to vote on watered- down version of pension reform

To contact the translator on this story: Giulia Camillo in Sao Paulo at gcamillo@bloomberg.net Reporter on the original story: Ana Carolina Siedschlag in São Paulo at asiedschlag@bloomberg.net Editors responsible for the original story: Daniela Milanese at dmilanese@bloomberg.net Josue Leonel

--RANDY WOODS

(Bloomberg) -- Emerging-markets rates duration where falling inflation expectations are keeping leaving real rates high, versus developed markets, may generate cross-country alpha with G-4 yields creeping higher.

• EM countries with the steepest curves include Poland (2s10s swap at 100bp, 84th percentile of 5-year range) and Hungary (197bp, 90th percentile)
  • The steepness allows to offset positive carry on receiving EM against paying EUR or USD rates
• If growth momentum sustains, there is risk of a synchronized drift higher in DM yields over the next few months via increased term premia, leading to potential reduced foreign demand
  • Japanese investors cut their purchases of U.S. bonds in August by more than half from the previous month and also turned net sellers of German and French debt
• NOTE: Treasury rates vol remains low vs binary nature of tax reform, Phillips curve that kicks-in which disrupts vol selling strategies/equity rally; see more here
• NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

To contact the reporter on this story: Tanvir Sandhu in London at tsandhu17@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Anil Varma