Wednesday, December 07, 2022

The interest rate in the United States will reach 5.0% in 2023

The peso begins the session with a depreciation of 0.65% or 13 cents, trading around 20.16 pesos per dollar, with the exchange rate touching a minimum of 20.0108 and a maximum of 20.1759 pesos per dollar. The depreciation of the peso is due to the strengthening of the US dollar by 0.61% according to the weighted index, after losing ground during the first two sessions of the week.

The strengthening of the dollar is related to a return to speculation about the future of monetary policy and the need to continue raising interest rates, despite the fact that there are downside risks to economic growth.

last afternoon, Minneapolis Fed President Neil Kashkari, pointed out that if core inflation continues to rise, the Federal Reserve may not halt growth when the rate reaches levels between 4.5% and 4.75%. For now, financial markets forecast that interest rates in the United States could approach 5.0% in 2023.

Across the main dollar, almost all currencies lost ground, with the exception of the Russian ruble, which advanced 0.38%. The highest depreciating currency is Swedish Krona with 1.10%It is followed by the Norwegian krone with 1.00%, the Chilean peso with 0.96%, the Swiss franc with 0.96% and the Polish zloty with 0.95%. With respect to the relevant currencies, the euro depreciates by 0.87% and trades at $0.9772 per euro, while the pound depreciates by 0.77% and trades at $1.1233 per pound and the Japanese yen depreciates 0.27% and trades at $149.67 per dollar. Trades on the yen.

It should be noted that, although the Japanese yen’s depreciation is moderate, it has accumulated 11 consecutive sessions of losses, falling 3.84% over that period and reaching a price of 149.72 yen per dollar today, August 14. , not seen since 1990. , The market speculates that the Japanese government may intervene to stop the disproportionate fall in its currency. However, Japan’s finance minister has only stated that he maintains close contact with the person in charge of monitoring the exchange rate within the ministry.

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For its part, commodities started the session with losses on the back of a firming US dollar, given concerns about global economic growth, especially on zero covid policy in China and the prospect of an economic slowdown in Europe and the United States. accompanied. in industrial metals, copper dropped 0.98% and is trading at $7,410 per metric ton, while nickel and aluminum are down 0.44% and 1.16%, respectively.

eventually, Oil rose 1.18% and is trading at $83.80 per barrel, as market participants focus risk on supply. It should be remembered that pending sanctions on Russian oil products from the EU, as well as OPEC + production cuts by 2 million barrels per day. Also, the American Petroleum Institute noted on Tuesday that oil reserves were reduced by 1.3 million barrels during the past week.

With regard to economic indicators, inflation in the United Kingdom was published, rising from an annualized 9.9% in August to 10.01% in September, reaching a maximum in July.

The high inflation was mainly due to the main component, reaching 6.5% per annum, the highest level since March 1992. This raises the possibility that the Bank of England will raise its interest rate by 50 basis points in its November 3 announcement.

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For its part, in the United States, the Mortgage Bankers Association (MBA) announced that mortgage applications fell 4.5% in the week of October 14, accumulating down four weeks in a row and reaching their lowest level since May 1997 . The 30-year mortgage rate continued to rise, 6.94 . reached%, its highest level since April 2002, affecting demand for mortgage loans.

In the United States, housing openings for September were also published, showing a monthly contraction of 8.1%, after rising 12.2% in August. opposite of this, Building permits see monthly growth of 1.4% in September, in contrast to the 2.7% drop in the previous month. With the above, it is possible to observe a decline in the construction sector, indicating that interest rates are holding back real estate projects in the United States.

During the session, the exchange rate is expected to trade between 19.98 and 20.22 pesos per dollar.

money and debt market

In the United States bond market, the rate on 10-year Treasury notes showed an increase of 10.4 basis points, reaching 4.11%, a rate not seen since July 2008. In Mexico, the M bond rate has increased by 7.5 basis points over 10 years, at 9.92 percent.

derivatives market

To hedge against depreciation of more than 20.50 pesos per dollar, a buy option (call), with an exercise date within one month, has a premium of 1.43% and represents the right to buy dollars in the above level. But there is no liability. , On the other hand, interbank forward for sale is 20.2567 pesos in one month, 20.8242 in 6 months and 21.5247 pesos per dollar in one year.

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