Halister News

(Bloomberg) -- Investors should consider callable municipal bonds due to their shorter effective duration relative to bullets, considering the Fed’s projected policy path, according to the Barclays municipal research team led by Mikhail Foux.

• Callable munis exhibit a slightly lower duration and higher yield when compared to bullet bonds with similar ratings
  • Callables look attractive with segment’s YTW about 60 basis points higher than the non-callable sector and about 15 basis points higher than the overall muni index
• Many callable bonds "are not efficiently called" and remain outstanding past their non-call period ends

To contact the reporter on this story: Justina Vasquez in New York at jvasquez57@bloomberg.net

(Bloomberg) -- Brazil central bank is expected to start slowing down the pace of monetary easing at Copom meeting next week, one year after the cycle started.

• 75bps cut on Oct. 25 is priced in given recent communications from policymakers and economic data, so the doubts are on future steps, according to analysts
  • Swap markets show expectations of a 50bps cut in December
  • Investors are more divided over the first meetings of next year, discussing whether BCB could promote a new cut or keep the rate unchanged, setting an end to the easing cycle
• "It’s difficult to repeat a cut of 75bps in December and doubt is if it will continue to cut the rate in 2018," David Beker, chief of economics and strategy for Bank of America Merrill Lynch in Brazil, said in a telephone interview
  • In doubt, BCB may opt to keep the phrase ’moderate reduction’ in the statement, which would lead the market to bet on a cut of 50bps in December; BCB could also leave the outlook open, says Beker
• Solange Srour, chief economist at ARX Investimentos, said a 75bps cut in October is "pretty clear", but in the following meeting it’s still open whether reduction will be of 75bps or 50bps
  • What will define whether BCB will cut the benchmark rate to 7% or 6.75% is the current inflation level
• BCB officials have made statements reinforcing the communication given by the last meeting minutes and statement, said Flag Asset’s Sergio Goldenstein, who’s also a former head of the BCB’s Open Market Operations Department
  • The balance of risks since the last Copom did not change significantly and, after a fall in inflation estimates on Focus survey, BCB’s own estimates for next year should retreat, he said
• BCB’s statement won’t necessarily answer the question regarding the extension or not of the cycle toward 2018, says Gustavo Rangel, ING economist for Latin America in New York
• NOTE: Access TOPLive to follow coverage of Brazil rate decision and analysts’ comments on Oct. 25 (in Portuguese). To create an alert, click here

To contact the translator on this story: Josue Leonel in Sao Paulo at jleonel@bloomberg.net To contact the translation editor responsible for this story: Giulia Camillo at gcamillo@bloomberg.net Reporters on the original story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net; Josue Leonel in Sao Paulo at jleonel@bloomberg.net Editors responsible for the original story: Daniela Milanese at dmilanese@bloomberg.net Taís Fuoco