Chilean Bonds Rebound on Government Measures
October 23 2019 - 03:09PM
Dow Jones News
By Matt Wirz
Chilean bond markets strengthened Wednesday following President
Sebastián Piñera's announcement of measures aimed at dousing the
social unrest that has gripped the country since last week.
The yield on peso-denominated Chile bonds due 2034 tightened to
3.202% from a recent high of 3.226% Tuesday, according to pricing
and analysis service Advantage Data Inc. The yield remained well
above the 2.9% range where the notes traded before mass protests
started last week. Yields rise as bond prices fall.
Chilean stocks initially rose on the new measures but were down
in early afternoon trading. The Ipsa blue-chip index has fallen
about 4.6% in recent sessions as protesters clashed with security
forces and looting and arson proliferated across the country.
Chile has been one of the most stable emerging-market economies
for decades but the country was hit by protests in recent days over
popular discontent about higher living costs and widening income
inequality.
Mr. Piñera's initiative includes a 20% increase in basic
pensions, a tax hike for high-income individuals and a rollback of
electricity rate increases. The $1.2 billion budgetary impact of
the changes equates to 0.4% of Chile's gross domestic product and
is fiscally manageable for the government, Citigroup said in a
research report Wednesday.
The president also "acknowledged the failure to perceive
widespread anger over economic inequality and asked for
forgiveness," according to the report.
U.S. government-bond yields dropped this morning as European
equities moved lower but have since rebounded in tandem with U.S.
stocks. The yield on the benchmark 10-year Treasury note recently
traded at 1.755%, compared with 1.768% Tuesday, according to
Tradeweb.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, held steady at 90.65 Wednesday, virtually
unchanged from 90.67 Tuesday.
Write to Matt Wirz at matthieu.wirz@wsj.com
(END) Dow Jones Newswires
October 23, 2019 14:54 ET (18:54 GMT)
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