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EMERGING MARKETS-Brazil rate futures yields up slightly despite weak GDP
March 8, 2017 / 12:44 AM / in 9 months

EMERGING MARKETS-Brazil rate futures yields up slightly despite weak GDP

 (Updates with final prices)
    By Bruno Federowski
    SAO PAULO, March 7 (Reuters) - Yields paid on Brazilian
interest rate futures rose slightly on Tuesday despite
worse-than-expected fourth-quarter economic data, as traders bet
the central bank will be more focused on upcoming economic
reports in deciding the pace of rate cuts.
    Brazil's gross domestic product contracted by 3.6 percent in
2016, statistics agency IBGE said, following a 3.8 percent drop
in 2015. The nation's two-year downturn is the worst on record
for Latin America's biggest economy.
    Still, rate future prices indicated investors were
split over the size of a likely rate cut in April. Markets
priced a 56 percent probability of a 100 basis-point reduction
and a 44 percent chance of a 75 basis-point cut, traders said.
    The central bank cut the benchmark Selic overnight lending
rate by 75 basis points last month, to 12.25 percent. Since
then, it has repeatedly stressed the pace of loosening will
depend on the economic performance as well as inflation
    The Brazilian real seesawed, tracking muted moves
among other Latin American currencies.
    Traders have been hunting for new clues over when the U.S.
Federal Reserve will go back to raising rates, a move which many
believe could come as soon as this month.
    The Mexican peso extended recent gains to a
four-month high, a day after the central bank sold $1 billion
worth of foreign exchange hedging instruments to support the
ailing currency.
    Brazil's benchmark Bovespa stock index fell 0.9
percent, with shares of toll road operator CCR SA
among the biggest decliners. CCR reported a 31 percent drop in
fourth-quarter net income, missing analyst expectations.

    Key Latin American stock indexes and currencies at 2345 GMT:
 Stock indexes                               daily %   YTD %
                                              change  change
 MSCI Emerging Markets               936.50     0.22    8.61
 MSCI LatAm                         2597.02    -0.89   10.95
 Brazil Bovespa                    65742.32     -0.9    9.16
 Mexico IPC                        47419.16    -0.97    3.89
 Chile IPSA                         4476.43      0.2    7.83
 Chile IGPA                        22462.17     0.32    8.33
 Argentina MerVal                  19248.16     0.26   13.77
 Colombia IGBC                      9928.66    -0.09   -1.97
 Venezuela IBC                     38140.89     1.31   20.30
 Currencies                                  daily %   YTD %
                                              change  change
 Brazil real                         3.1201     0.22    4.14
 Mexico peso                         19.491     0.61    6.43
 Chile peso                             659     0.23    1.78
 Colombia peso                      2956.95     0.66    1.51
 Peru sol                             3.279     0.42    4.12
 Argentina peso (interbank)         15.5475    -0.77    2.11
 Argentina peso (parallel)            16.04     0.06    4.86

 (Reporting by Bruno Federowski; Editing by Chris Reese and
Leslie Adler)

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