Emerging market debt slips on softer equities; Ecuador continues to fall

By Reshmi Basu, Paul Deckelman, and Paul A. Harris

New York, Dec. 18 - Emerging market debt nudged lower Monday amid thin trading as investors await a heavy slate of U.S. economic data this week.

Sources noted that the broader market ticked lower during a "typical" December day.

"The market is very quiet," said a buyside source.

"People are starting to head out."

As 2006 comes to an end, investors are closing out their books, having secured a double-digit return for the year - at least if they matched or exceeded the market.

Nonetheless, one source noted that there are some key economic reports yet to be released this week, which potentially could set the tone for trading note just in the few remaining sessions of 2006 but for the start of 2007 as well.

Among them are Tuesday's releases of the Producer Price Index and housing starts in the United States. And on Friday, the Personal Consumption Expenditures index will be released.

Last Friday, emerging markets saw a positive session on subdued inflation numbers in the United States, which fed some investors' hopes of a goldilocks scenario.

And investors will be looking at this week's data for clues into which way the U.S. economy is heading.

Meanwhile with the exception of Ecuador, emerging markets continues to take its cue from the U.S. economic story. On Monday, the debt market tracked a softer U.S. equities market lower.

The bellwether Brazilian bond due 2040 slipped 0.10 to 133 bid, 133.25 offered. Turkey saw red as its bond due 2030 lost 0.13 to 154.875 bid, 155.375 offered. And the Russian bond due 2030 shed 0.28 to 113.40 bid, 113.60 offered.

Turning to Asia, Indonesia and the Philippines were "better bid," according to a market source.

In trading, the Indonesian bond due 2016 was up 0.75 to 109.75 bid, 110.50 offered. The Philippine bond due 2016 gained 0.75 to 112.75 bid, 113.25 offered while the bond due 2025 was unchanged to 142.375 bid, 143.125 offered.

Elsewhere, in a repeat performance, Ecuador scored another volatile session on uncertainty surrounding whether the country will attempt to renegotiate its external debt.

In trading, the Ecuadorian bond due 2015 gave up 0.75 to 94 bid, 95 offered while its bond due 2030 shed 0.25 to 88 bid, 88.50 offered.

© 2015 Prospect News.
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