Fynsa
The flow of buying continues to dominate the foreign exchange market, despite sales by both the Central Bank and the Treasury.
The spread between the local rate and the FED rate has been compressed, but the game will continue until we have clarity on the beginning of the rate cut in the US and we discount the level to which the Central Bank will have to adjust rates.
January's inflation surprised to the upside, but we must remember that a new basket for measuring inflation debuted, along with a new base 2023 = 100, which additionally incorporated methodological changes and improvements.
It will be vital to monitor the upcoming data to assess the need to accelerate the process of cutting the TPM.
The December CPI surprised the market with a 0.5% m/m drop; in this scenario we believe there is room for 100bp cuts or even a 125bp run.
It is time to sell the short-term deposit and buy the long-term deposit, looking for better rates in issuers that offer a higher premium.
Evaluating the Central Bank's smaller cuts as a "tactical pause", we believe that these would only be transitory, awaiting a less convulsive context.
We can expect a good return on issuers of adequate credit quality.
The low growth capacity of our economy should be a major concern, regardless of the monthly data.
The sector has been looking for alternatives in non-bank players for some time and, within these, the Private Debt business has shown particular attractiveness.
