What Jumps Out: Avoiding The Rabbit Holes

Sometimes it is hard to contemplate the news in just one country when the world is so concentrated in the events of another, that so effect not just that particular country but also many others beyond their borders. But as we have seen over just the past week, despite the focus being on Ukraine, capital markets stakeholders have continued to busily position themselves, be it equities, safe haven bonds and currencies, energy, or even wheat for making the humble loaf – there is still much to do. The sun will rise again. In fact for many it is already showing signs of an appearance and even Colombia still has a story to tell.

It may be a small emerging market but it still matters to many people, not least of which are those who reside here and there are constant developments.

Last Friday the Central Bank left rates at 4%, as expected given it was a ‘Non-Decision’ meeting, there was also precious little commentary. The wisdom of this inactivity will only become clear this coming weekend, what will February inflation register? We are already at 6.94%, are we set to see CPI rise further? The prospect of the Central Bank keeping inflation within the 2-4% band for YE 2022 is already remote, there may be some navel gazing if February surprises. In the latest Bloomberg survey last week, is now suggesting a full year reading of 6.1%, up from 5.3% last time analysts were asked. For 2023 the latest call is 3.6%, thankfully only a little higher.

In terms of growth, in that same survey, the consensus for 2022 has moved up to 4.3%, still lower than the IMFs 4.5%, but still very healthy even with inflation fueling. Rates are expected to move to 5% but again from where we are not a huge increase.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

This week we have the latest urban unemployment number for January, the seasonality of the reading demonstrated by an increase to 15%, from 11.6% in December, it also perhaps demonstrates the challenge associated with calculating any employment data in Latin America. Particular attention will once again be paid to the gender data, the post pandemic recovery in female employment, has lagged alarmingly.

This week we will also have from the DANE the exports data for January, hopefully there will be an upside surprise which will keep a lid on the trade deficit which has grown exponentially over the past year due to the recovery in internal demand – however oil production is not what it was and coal looks set to remain out of vogue going forward. The best that can be hoped for is a rearguard action.

Finally, we are less than two weeks from both the Congressional elections and the various primary elections which will determine the final list of candidates for the May Presidential election, first round. The political rabbit hole remains both deep and wide – Alice as well as the Queen of Hearts and all of her entourage could fit in there many times over. We may get some clarity on March 13 with the makeup of the new Congress being known, but in reality until May we are still going to see a lot of fluff in the markets, especially amongst those related to Peso trading.

Here is hoping for more encouraging global headlines.

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That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops