Fynsa
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.
For the time being, it is hard to think that the market alone will continue with rate rallies without a more committed Fed on the way to easing interest rates.
Market conditions have pushed Agency MBS valuations to historically low levels, making them an attractive investment.
Viewing the Central Bank’s minor rate cuts as a “tactical pause,” we believe these would be only temporary, pending a less turbulent environment.
According to the Central Bank, the pace of future interest rate cuts is not tied to the magnitude of the first cut, thereby downplaying the urgency of quickly moving to a neutral level
The start of the monetary easing cycle will accelerate the shift of portfolios from IIF to IRF. Interest rate levels and accruals boost the value of the short end of the yield curve, but UF-denominated instruments are becoming more attractive, especially for terms of 2 to 5 years.
The sector continues to expand, although there have been adjustments in occupancy rates and rent levels
The risk of reducing the MPR and then having to reverse it due to a misreading of the information is much higher than leaving it at 11.25% for longer than appropriate.
