Halister News

(Bloomberg) -- Guatemala’s Banco de los Trabajadores is operating normally and “financially solid” after authorities arrested members of its board of directors, Operations Director Benjamin Arriaza said in an email.

• Substitute board members and president making “corresponding decisions”

NOTE: Guatemala police seek bank directors for money laundering, Link

(Bloomberg) -- El Salvador’s economy expanded 1.4% y/y in August. Guatemalan authorities launched a series of raids this morning in connection with a money laundering probe, according to state-run news agency AGN. Panama’s congress approved a $21.7b budget for next year that includes $500m in additional revenue from the new canal locks. FX:

• Costa Rica colon -0.6% to 555.67 USD
• Dominican peso unchanged at 46.205
• Guatemalan quetzal unchanged at 7.5275
• Jamaica dollar unchanged at 129.2
• Trinidad & Tobago dollar -0.1% to 6.67045

GOVT DOLLAR BONDS:

• Barbados 2022 yield -12bp to 7.12%
• Costa Rica 2023 yield +1bp to 4.83%
• DomRep 2026 yield +6bp to 5.18%
• ElSal 2025 yield unchanged at 6.02%
• Guatemala 2022 yield -3bp to 3.62%
• Honduras 2024 yield unchanged at 5.57%
• Jamaica 2025 yield +2bp to 5.17%
• Panama 2036 yield +3bp to 4.19%
• Trinidad 2020 yield +2bp to 2.56%

EQUITIES:

• Jamaica Stock Market Index +0.7% to 167,548.77
• Trinidad & Tobago Composite +0.2% to 1,173.25

ECO INDICATORS/NEWS:

• EXPECTED: Panama tourism arrivals; Jamaica unemployment rate; Costa Rica GDP; Bermuda CPI; Bahamas CPI; Jamaica current account balance and remittances.

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--BILL FARIES

(Bloomberg) -- Oct. 7 recommendation to go long UST 10Y at 1.73% hit stop at 1.86% yesterday, however “the global reach for yield is still far from over,” TD strategists Gennadiy Goldberg and Priya Misra write in note.

• Selloff in global rates has been led by gilts and bunds, “not by a considerable re-pricing” of December Fed rate hike odds which remain near 70%
• “Yield-starved buyers will step into the fray once the volatile price action subsides,” as central banks won’t be able to reduce accommodation as much as market expects
• TD continues to recommend long UST 10Y vs bunds based on view that ECB taper fears will weigh on bunds

(Bloomberg) -- FOMC will likely keep rates on hold at Nov. 1-2 meeting in Washington, while possibly suggesting a forthcoming move at its Dec. 13-14 gathering, based on published research from economists.

• Credit Suisse sees chance that FOMC explicitly mentions December in its statement; Morgan Stanley moves forward its call for a hike to December, most recently had expected no move through 2017
• Market-implied probabilities stand at ~17% for a rate increase in November and above 70% for December; fed funds futures not fully pricing next rate increase until 1Q 2017

• BNP (Paul Mortimer-Lee, others)
  • FOMC to make small refinements to statement, “edging closer to a hike”
  • Policy makers to acknowledge increase in inflation, further progress toward achieving balanced risks
  • Case for a hike continues to strengthen
  • MORE

• Capital Economics (Paul Ashworth)
  • Not ruling out a “surprise” hike in November, even though Fed will probably wait until December
  • Likely wouldn’t require much to persuade Fed “centrists” to join hawks and support a rate increase
  • Fed may have enough confidence now to act ahead of presidential election
  • MORE

• Credit Suisse (James Sweeney, others)
  • FOMC to reassert view that data is sufficient for a hike
  • “Hawkish surprise” would be explicit guidance about a move in December
  • Don’t expect Fed to manage a hike this year; sticking with view that policy makers will be on hold until 2Q
  • MORE

• Deutsche Bank (Joseph Lavorgna, others)
  • Fed to “more strongly” signal intent to raise rates; probability is “high” that policy makers act in December
  • Would take “substantial” deterioration in data, financial conditions for Fed to “remain on sidelines at this point”
  • MORE

• Morgan Stanley (Ellen Zentner, others)
  • Morgan Stanley changes call, now sees Fed hike in December; had most recently seen no hikes through 2017
  • October jobs report to “all but solidify a December hike”
  • FOMC to release “benign” statement, saying economy is expanding at moderate pace with solid job gains
  • MORE