Chilean Bonds Rebound on Government Measures

Date : 10/23/2019 @ 7:09PM
Source : Dow Jones News

Chilean Bonds Rebound on Government Measures

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)

Copyright (c) 2019 Dow Jones & Company, Inc.


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