LatAm Daily Update

Mexico (-)

• INEGI’s consumer confidence index for October was just released showing that that consumption should continue to show a slow performance. September’s index was below expectations at 90.6 when a number in the 91.2 territory was expected. Private consumption has recovered in a very slow and inconsistent fashion and continues to lag other demand-side indicators, most notably government consumption and net exports.
• From here, we expect domestic demand to continue to recover although at a slow pace with private consumption still in need of additional momentum.


Brazil (=)

• The COPOM minutes tomorrow morning should capture the market’s attention. Last week the CB hiked the Selic rate by 25bp in a surprise move to 11.25% signalling that the CB wants to have a more proactive role in the inflation fight in spite of weak growth.
• In this document, we need to look for hints on the duration and intensity of the ongoing tightening cycle. Our preliminary estimates (before reading the minutes) suggest that we are likely to see another 75bp hiking on top of the 25bp already delivered. Regarding potential timing, probably the faster the actions happen the better and, as such, we expect to see moves in early December and also by mid-January and early March, assuming a quarter of a point increase in each meeting.


Colombia (=)

• Later today we expect to see inflation for October being released. Here, we are likely to see a dual picture: a low MoM reading and a high YoY one. The first one may be explained as some items such as food should show signs of relief in the short term, while the YoY figure shows the effect of a low base comparison. On this last item, food prices and administered prices kept inflation subdued at the beginning of the year, and then we saw a reflation trend that has taken the inflation index to signal levels that should stay above 3% in the next months and likely see inflation just above 3.1% by year-end, which is our year-end forecast.