April 18, 2017 / 10:01 PM / a year ago

EMERGING MARKETS-Brazil rate futures yields fall on central bank minutes

 (Updates with final prices, Mexican peso)
    SAO PAULO, April 18 (Reuters) - Yields paid on Brazilian
interest rate futures fell on Tuesday after minutes of the
central bank's last policy meeting showed officials considered a
steeper rate cut, while Mexico's peso sagged following
aggressive comments by Donald Trump on trade.
    According to the minutes, weak economic activity in Brazil
could allow for an acceleration of monetary easing, but
lingering uncertainties make the present 100 basis-point pace
more appropriate.
    Rate future yields indicated a 13 percent
probability that the central bank will cut the benchmark Selic
rate by 125 basis points at its May meeting, traders said,
compared to 8 percent on Monday. Still, investors mostly bet the
bank will stick to 100 basis-point cuts.
    Meanwhile, Mexico's peso erased earlier gains to close down
by 0.6 percent against the dollar after U.S. President Trump
said he would make some "very big changes" to NAFTA or ditch the
agreement that underpins the bulk of North American trade.
    Brazil's economic downturn unexpectedly deepened late last
year, data showed, suggesting a slow recovery from the worst
recession on record. That helped lower inflation rates to the
central bank's 4.5 percent target, facilitating a steep
rate-cutting cycle.
    Still, uncertainties over the approval of structural reforms
including revamping Brazil's costly pension system have put many
investors on edge. A senior lawmaker said on Tuesday the
Brazilian government has agreed to further water down the
pension reform in order to secure its approval.
    The Brazilian real fell 0.29 percent, while most
Latin American currencies seesawed. Many traders kept to the
sidelines amid tensions between the United States and North
Korea, which have weighed on demand for riskier emerging market
    The Chilean peso weakened 0.4 percent, following
copper prices lower.
    Latin American stock indexes and currencies at 2200 GMT:
 Stock indexes                     Latest       Daily   YTD pct
                                                  pct    change
 MSCI Emerging Markets                957.70    -0.52     11.07
 MSCI LatAm                         2,654.17     0.12     13.39
 Brazil Bovespa                    64,158.84    -0.27      6.53
 Mexico IPC                        48,762.53    -0.51      6.83
 Chile IPSA                         4,837.87    -0.47     16.54
 Chile IGPA                        24,281.11    -0.39     17.11
 Argentina MerVal                  20,669.72    -0.37     22.18
 Colombia IGBC                     10,185.33    -0.06      0.57
 Venezuela IBC                     47,561.23     0.49     50.01
 Currencies                           Latest    Daily   YTD pct
                                                  pct    change
 Brazil real                          3.1134    -0.29      4.36
 Mexico peso                          18.605    -0.59     10.31
 Chile peso                            648.5    -0.43      3.42
 Colombia peso                       2,839.5     0.39      5.71
 Peru sol                               3.25     0.00      5.05
 Argentina peso (interbank)          15.2700    -0.64      3.96
 Argentina peso (parallel)             15.82     0.25      6.32
 (Reporting by Bruno Federowski; Editing by Grant McCool and
Chris Reese)
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