What Jumps Out: A Quiet Week Ahead?

One always wishes to err on the side of caution when it comes to a statement like it looking like a quiet week in Colombia, however at first blush it appears that way. There is absolutely nothing on the economic calendar, nothing from the DANE or even a financial survey – that said something could easily crop up.

Over the weekend of course the DANE reported January inflation and the 13.25% reading was only slightly above December (13.12%) and was below the consensus of 13.33%. The monthly number of 1.78% was lower than the 1.87% and whilst food (2.46%) continues to concern representing 28% of that monthly increase, it was actually transport (3.98%) which was the largest contributor with 29% of the overall increase. Housing, which includes energy costs, rose only 0.49% and contributed very little.

We remain data dependent, but the January data perhaps suggests the Central Bank decision to only increase rates by 75bps to 12.75% last week was correct.

Foreigners now own $26 billion USD in local Colombian debt.

So what will we be looking at ? Gustavo Petro is likely to continue front and center.

First of all salvos are still being exchanged over the Bogota metro system; whilst the deal is for a raised metro, the president wants it to go underground. Even if practical, which many doubt, it is going to cause huge delays as many aspects will surely have to be redesigned and re-budgeted.

We have yet to hear more on government controls in the energy sector, we have had a few headlines but little else thus far – but it certainly dented the prices of the related stocks last week.

On the markets, eyes remain in China and the Emerging Markets – will the rally continue and how far is it expected to go in 2023 ? Oil is clearly related to this and the Peso as well—at the moment DXY is steering the currency but if oil jumps it will be hard to ignore.

The Peso, depending on the day, has strengthened between 8-10% since its lows, however despite this overseas investors have been active in the early part of 2023.

On the equity markets foreign funds were the largest buyer of assets with net purchases of $60mn USD. The fixed income market has seen the appetizing carry trade drawing in investors once again with net purchases of $536mn USD – foreigners now own a total of $26bn USD in local debt.

It appears the age-old rule related to foreigners being more able to see the wood for the trees continues to hold true in Colombia.

Please find below the LinkedIn Video :

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_colombia-economy-energy-activity-7028332291772796928-7DBe?utm_source=share&utm_medium=member_desktop

Have a wonderful weekend.

Roops