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CHILE: Guillier And Pi?era Face Second Round For Presidency On Sunday

The ruling candidate Alejandro Guillier and the conservative former President Sebasti?n Pi?era will face each other on Sunday for the presidency of Chile in a hard-fought ballot, in which the continuity of the center-left reforms are challenged by Pi?era's promises for greater economic growth.

Pi?era achieved 36.6% of the votes in the first round, while the Senator Guillier won 22.7% of the vote. Although both candidates would maintain the free market model, Pi?era intends to reverse the tax and social reforms promoted by the current president Michelle Bachelet. If elected, Pi?era promises to double the growth of the economy.

Meanwhile, Guillier seeks to shield Bachelet's economic and social reforms and has promised to focus on deepening free education access, ending the monopoly of the Pension Fund Administrators (AFP) and promote a new Constitution for the South American country.

The main pollers in the country indicate a too close to call scenario. Cadem's survey shows Pi?era with 40% and Guillier with 38.6%, while Criteria gives 47% for Pi?era and 45% for Guillier.


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ARGENTINA: China Reduces Tariffs On Food Imports

The Chinese government has cut import tariffs for food products as of December 1, a decision that favors some of Argentina's exports, according to the South American country.

The regulations establish lower temporary tariffs aimed at reducing prices and stimulating spending of the final consumer on 187 products that China has to import.

According to the Argentinean government, there was a tariff reduction on 32 items that favor the country - for example, frozen shrimp (from 5% to 2%). That is one of the main export products of the Argentinean fishing sector to China. In the dairy sector, the tariff has been reduced for all cheeses, except for fresh ones.

In food and beverages, there will be a reduction in the tariffs for uncooked pasta, without egg (mainly comprising dried pasta) homogenized whiskey, said the Ministry of Agribusiness of Argentina.

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Japan All Industry Activity Rebounds As Expected In October

Japan's all industry activity increased as expected in October, after falling in the previous month, data from the Ministry of Economy, Trade and Industry showed Wednesday. The all industry activity index rose 0.3 percent month-over-month in October, reversing a 0.5 percent decrease in September. Industrial production advanced 0.5 percent over the month and tertiary activity gained by 0.3 percent. At the same time, construction output dropped 0.3 percent. On a yearly basis, all industry activity growth accelerated to 2.0 percent in October from 1.0 percent in the prior month.

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BoJ Keeps Monetary Policy Unchanged

The Bank of Japan kept its monetary stimulus unchanged as widely expected on Thursday.

Governor Haruhiko Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the amount of outstanding JGB holdings at an annual pace of about JPY 80 trillion.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

The board also decided to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

With regard to the outlook, Japan's economy is likely to continue its moderate expansion.

The year-on-year rate of change in the CPI is likely to continue on an uptrend and increase toward 2 percent.

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PETROBRAS: Company To Invest US$ 60 Billion In Pre-salt By 2022

Brazilian state-owned oil company Petrobras is directing most of the investments in the area of oil production in the pre-salt layer, and by 2022 around US$ 60 billion in will be destined to the area, said Pedro Parente, Petrobras' chairman, during a press conference.

According to him, Brazil today is the leader in oil exploration in Latin America and the ninth largest producer in the world. The goal is to reach the seventh place in the next few years.

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Japan Housing Starts Fall Less Than Expected In November

Japan's housing starts declined at a slower-than-expected pace in November, data from the Ministry of Land, Infrastructure, Transport and Tourism showed Wednesday.

Housing starts fell 0.4 percent year-on-year in November, much slower than October's 4.8 percent decrease.

That was also below the 2.6 percent drop economists had forecast. Moreover, it was the fifth successive monthly fall.

Annualized housing starts climbed to 951,000 from 933,000 in the previous month. It was forecast to rise to 934,000.

Data also showed that construction orders received by big 50 contractors surged 20.5 percent yearly in November, following a 6.7 percent increase in October.

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US Treasury Yields Drop as Consumer Morale Declines

U.S. government debt yields fell on Wednesday, after consumer morale dropped in December while the yield curve continued to flatten.

The yield on the benchmark 10-year Treasury note slipped to 2.423 percent, while the yield on the 30-year Treasury bond was lower at 2.753 percent. Bond yields move inversely to prices.

Consumer confidence declined in December, down from 17-year highs in November. The Conference Board's measure of consumer confidence dropped to 122.1 in December.

The Treasury Department auctioned $34 billion in 5-year notes at a high yield of 2.245 percent. The bid-to-cover ratio, an indicator of demand, was 2.36.

Indirect bidders, which include major central banks, were awarded 58.4 percent. Direct bidders, which includes domestic money managers, bought 7.9 percent.

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US Treasury Yields Higher on Positive Economic Data

U.S. government debt yields increased on Thursday following the release of good economic data which showed that the count of Americans filing for unemployment benefits was steady while the Chicago PMI surpassed expectations.

The yield on the benchmark 10-year Treasury note was higher at around 2.431 percent, while the yield on the 30-year Treasury bond increased to 2.761 percent. Bond yields move inversely to prices.

U.S. government debt yields fell on Wednesday, following data that showed a decline in consumer confidence during the month of December.

The U.S. Treasury auctioned $28 billion in 7-year notes at a high yield of 2.37 percent. The bid-to-cover ratio, an indicator of demand, was 2.55. Indirect bidders, which include major central banks, were awarded 60.5 percent. Direct bidders, which include domestic money managers, were awarded 13.1 percent.

According to a report from the Department of Labor, the number of Americans applying for state unemployment benefits remained unchanged in the previous week. The Chicago PMI for December increased to 67.6, the highest level since March 2011, according to Reuters.

Trade is expected to be lighter across global markets as investors await the beginning of a new year.

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Eurozone Manufacturing Sector Growth at Record High in December

Eurozone factories finished 2017 by growing at their quickest pace in over two decades, which indicates a much better than expected year for businesses in the bloc.

The eurozone manufacturing purchasing managers' index in December came in at 60.6, its highest level since surveys began in mid-1997, according to latest figures shown. Any figure above 50 indicates growth over the month.

The figures confirmed earlier flash estimates, which implied the sector had marked its best annual performance on record, while new national-level data pointed to broad-based growth across the continent.

Businesses in Germany, Ireland and Austria all posted record growth, while Greece faced its best results for almost a decade.

Eurozone factory activity is surpassing its peers, including Britain. That has added to expectations that the European Central Bank, which this month will reduce its monthly bond purchases, will shutter the program later this year.

The factory output index, which feeds into a broader set of data including services, increased to 62.2 from 61.0 in November. That was its highest in more than 17 years and a reading surpassed only once in the survey's over two decades of history.

The ECB currently expects the eurozone economy to have grown by 2.4 percent in 2017, compared with estimates of just 1.7 percent at the beginning of 2018.

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Tesla Falls on Further Delay of Model 3 Production Target

Tesla Inc. pushed back a production target for its new Model 3 sedan for the second time, disappointing investors and causing its shares to slide.

The electric-car maker now projects completing the production of 2,000 Model 3s per week by the end of the first quarter, postponing plans to hit a milestone by another three months. Tesla said it would likely assemble around 5,000 vehicles per week by the end of the second quarter.

The announced delay in production targets caused shares of the company to fall in extended trading. The stock fell by as much as 2.7 percent after the end of regular trading to $308.80.

The Model 3 is seen as a key to Tesla's long-term success, as it is the most affordable among its cars to date and is the only one with the capacity to transform the niche carmaker to a mass producer amid a number of competitors who are making their push into the electric vehicle market.

Assembling the car in an efficient manner and delivering it without any setbacks to customers is also critical as the company faces high cash burn. The company burned through $1.1 billion in capital expenditures in its third quarter and said in November that Q4 capex would be around the same figures in the previous quarter. The delays also increases the risk that reservation-holders would junk their orders.

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U.S. Yields Rally as Investors Eye Jobs Data

U.S. government bond yields edged higher, driving Treasury bond prices lower, as investors weighed in data on jobless claims and private-sector payrolls a day before the release of the official December U.S. jobs report.

Yield on the ten-year Treasury note trimmed an earlier gain to close at 2.452 percent, rising by around 0.7 basis point, while the two-year Treasury note yield advanced 2 basis points to 1.955 percent. The yield on the 30-year Treasury bond advanced marginally to 2.783 percent.

On Wednesday, Treasury yields retreated after minutes from the Federal Reserve's December meeting underlined divisions over the pace of future monetary policy tightening.

The following day, attention was diverted towards the labor market as investors priced in the private-sector employment data from payroll-services company ADP and stood by for data on weekly jobless claims, with yields continuing their rally after a solid reading from ADP.

ADP reported private-sector payrolls increased 250, 000 in December. First time jobless claims in the week ended December 30 came in at 250, 000 versus a revised 248, 000 a week earlier. The figure is higher than the 240, 000 estimated initial claims.

But markets are mostly focused on the December jobs to be released in Friday. Friday's jobs data is expected to show an increase of 198, 000 in December nonfarm payrolls after a 228, 000 increase in November. The jobless rate is estimated to remain steady at 4.1 percent, while average hourly earnings are projected to increase 0.3 percent after a 0.2 percent in November.

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European Economics Preview: Eurozone Economic Confidence Data Due

Economic confidence and retail trade from euro area and factory orders from Germany are due on Monday, headlining a busy day for the European economic news.

At 2.00 am ET, Destatis is scheduled to issue Germany's factory orders data. Economists forecast orders to fall 0.2 percent on month in November, reversing a 0.5 percent rise in October.

In the meantime, industrial production data from Norway is due.

At 3.00 am ET, the Czech Statistical Office releases industrial and construction output and foreign trade figures. Also, Hungary's industrial output and retail sales reports are due.

At 3.15 am ET, the Swiss Federal Statistical Office publishes inflation data.

At 4.30 am ET, Eurozone Sentix investor confidence data is due. The indicator is forecast to rise slightly to 31.2 in January from 31.1 in December.

At 5.00 am ET, the European Commission publishes Eurozone economic sentiment survey results. The index is seen at 114.7 in December versus 114.6 in November.

In the meantime, Eurostat releases retail sales data. Economists forecast euro area retail sales to grow 1.2 percent on month in November in contrast to a 1.1 percent fall in October.

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German Manufacturing Orders Drop in November

German manufacturing orders slipped in November, marking its first decline since July 2017 on the back of a drop in domestic and international demand.

The gauge was down 0.4 percent in November from October on a seasonally and working day adjusted basis. The October reading was revised upwards to a rise of 0.7 percent from 0.5 percent previously, according to data by the Federal Statistics Office.

The Economy Ministry, detailing the figures, said the decline in November was a result of fluctuations in large orders but adds that the trend remained strongly upwards.

A breakdown of the data showed domestic orders dropped 0.4 percent on the month and foreign orders by 0.5 percent.

According to ING economist Carsten Brzeski, the overall fall is rather of a technical nature than any sign of weakness.

Germany is facing robust domestic demand supported by record-high employment, rising real wages and low borrowing costs while its exporters are benefiting from a global economic recovery.

The Ifo economic institute forecasts the German economy to grow by 2.6 percent in 2018, pointing to a broad upswing that is generating employment and buoyant tax revenues.

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US Job Openings, Layoffs Drop in November

U.S. job openings dropped for the second consecutive month in November with declines in the manufacturing and real estate sectors, supporting economist forecasts that job growth will slow this year.

The monthly Job Openings and Labor Turnover Survey, or JOLTS, by the Labor Department, also showed that layoffs fell to a six-month low, however, showing sustained labor market strength.

Job openings, a measure of labor demand, fell by 46,000 to a seasonally adjusted 5.88 million, the lowest level since May. The job openings rate was 3.8 percent, a decline from October's 3.9 percent.

The JOLTS report revealed that layoffs fell 7,000 to 1.67 million in November. That was the lowest level since May and marked five consecutive months of drops.

Industries including manufacturing, business services and transportation and warehousing had fewer openings than in October, while available positions rose in construction and retail, the JOLTS report showed.

Hiring declined 104,000 to 5.49 million in November, and the hiring rate fell to 3.7 percent from 3.8 percent. Economists expect job growth this year to slow to well below the 2017 monthly average of 170,000 as the labor market reaches full employment.

The jobless rate is at a 17-year low of 4.1 percent and economists expect it to decline to 3.5 percent by the end of this year. Non-farm payrolls increased 148,000 in December.

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Global Economy to Rise to 3.1% in 2018 - World Bank

The World Bank is expecting global economic expansion to increase to 3.1 percent this year following a much stronger-than-expected 2017, as the rebound in investment, manufacturing, and trade continues, while commodity-exporting developing economies benefit from firming commodity prices.

The world's economic output expanded three percent last year as more than half of economies accelerated, due to a rebound in investment, manufacturing activity and trade, bank economists said.

However, the World Bank warned that over the longer term, slowing potential growtha measure of how fast an economy can expand when labor and capital are fully employedputs at risk gains in improving living standards and reducing poverty around the world.

Expansion in advanced economies is expected to moderate slightly to 2.2 percent in 2018.

Growth in emerging market and developing economies as a whole is seen to strengthen to 4.5 percent this year, as activity in commodity exporters continues to recover.

The slowdown in potential growth is the result of years of weakening productivity growth, weak investment, and the aging of the global labor force. The deceleration is widespread, affecting economies that account for more than 65 percent of global GDP.

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U.S. Producer Prices Drop, Unemployment Claims Rise

U.S. producer prices dropped for the first time in almost 1-½ years in December amid falling costs for services, which could weigh on expectations that inflation will pick up this year.

Separate data showed that initial claims for jobless benefits rose for the fourth consecutive week to over a three-month peak. Winter and snow in parts of the United States likely kept some workers at home, which accounts for the previous week's rise in unemployment claims.

The U.S. Federal Reserve is projecting three rate hikes for 2018. It raised rates three times in 2017.

According to the Labor Department, its producer price index for final demand dropped 0.1 percent in December. It was the first decline in the PPI since August 2016 and followed two consecutive monthly growth of 0.4 percent.

The PPI increased 2.6 percent from the same period in 2016, after accelerating 3.1 percent in November.

A key gauge of underlying producer price pressures, excluding food, energy and trade services, climbed 0.1 percent in December. The so-called core PPI rose 0.4 percent in November. It increased 2.3 percent in the 12 months through December after rising 2.4 percent in November.

In the separate report, the Labor Department said initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 261,000 for the week ended Jan. 6, the highest level since late September.

Claims have risen since mid-December, though the data tend to be volatile during year-end holidays.

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Asian Stocks Rise on Upbeat Economic Growth Outlook

Asian stocks started 2018 on a strong foot and are on track for a new record peak amid optimism in global growth.

Equity markets from Sydney to Hong Kong gained. U.S. markets are closed on Monday for the Martin Luther King Jr. holiday after the S&P 500 index ended on Friday at an all-time peak.

Japanese shares were advancing even after appreciation in the yen the past week, with Softbank Group benefiting from speculation of a listing for its mobile unit.

Developments in the global economy have been lifting morale in the early part of this year while equities are building on the impressive gains from 2017.

Retail sales fuelled optimism in the American economy and JPMorgan Chase & Co. signaled that the recent tax reduction law will raise profits. A pick up in U.S. core inflation offered another indication that the recovery is gathering pace nine years following the global recession.

Money managers will evaluate progress in corporate America this week with more earnings releases, while results are scheduled across the world from companies in a range of sectors. Growth data from China will also be in focus this week, as well as ongoing negotiations to form a coalition government in Germany.

Meanwhile, the dollar remains weak, pulled down by strong gains in the euro.

The common currency remained near a three-year peak on wagers that central bank stimulus will be pared back further in Europe as its economy mends.

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Global Automakers Urge Trump Administration Not to Terminate NAFTA

Major automakers urged the Trump administration not to terminate the North American Free Trade Agreement and hopes that the United States, Canada and Mexico will be able to conclude a modernized and improved trade pact.

Trump has threatened to withdraw from NAFTA, which is heavily utilized by automakers that have production and supply chains spread across the three countries.

Fiat Chrysler Automobiles Chief Executive Sergio Marchionne said he hoped the Trump administration would retune some of its trade talk demands.

Marchionne said FCA's truck production shift in part goes a long way I think in addressing some of President Trump's concerns about the dislocation of production capacity out of the United States.

That decision reduces the risk those trucks would be hit with a 25 percent tariff if NAFTA unravels.

Ford Motor Co CEO Jim Hackett said NAFTA needs to be modernized, adding that of Detroit's Big Three automakers, Ford has the highest percentage of U.S.-built vehicles.

General Motors CEO Mary Barra expressed optimism NAFTA will survive with improvements. Other senior GM executives stood by the company's plans to continue building trucks in Mexico.

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UK Inflation Rate Drops to 3%, the First Decline for 6 Months

UK inflation rate has dropped for the first time since June, mainly due to the impact of air fares. The rate fell to three percent in December, pulling back from November's rate of 3.1 percent, a six-year peak.

According to the Office for National Statistics, although airfares increased the previous month, it had a smaller impact than at the same point in 2016.

Inflation fell because the annual December rise in air fares was not as high as the previous year, the rate of price growth for recreational goods, including games and toys, also dropped. These categories are particularly sensitive to a fall in the exchange rate.

The ONS said it was too early to say whether this was the start of a longer-term reduction in the rate of inflation. It also notes that the slowing rate of growth was offset partially by higher tobacco prices, reflecting the duty increases that came into effect following the budget, as well as a rise in petrol and diesel prices.

The Bank of England has said it thinks inflation peaked at the end of 2017 and will fall back to its target of two percent in 2018.

Although the Bank may still look to raise interest rates from 0.5 percent, pushing the cost of borrowing to levels unseen since before the financial crisis, economists said there were still difficult patches ahead for the economy, which may be unsettled by the Brexit negotiations.

In November, the Bank's Monetary Policy Committee (MPC) raised its key interest rate for the first time in more than a decade from 0.25 percent to 0.5 percent.

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Oil Prices Rally on Disruption Threats in Nigeria, declining U.S. Inventories

Oil prices edged up on a reported decline in U.S. crude stockpiles and as militant groups in Nigeria threatened to launch an assault on the nation's petroleum infrastructure.

But prices continued to be below the three-year highs as fuel stockpiles continue to be ample and as refineries reduce operations.

Brent crude futures stood at $69.56 per barrel, 18 cents or 0.3 percent higher from their last settlement. On Monday, the international benchmark hit their highest level since December-2015 high of $70.37 per barrel.

U.S. WTI crude futures traded at $64.25 per barrel, 28 cents or 0.4 percent higher from their last close. WTI hit their highest level since December, 2014 at $64.89 per barrel.

According to traders, prices have been lifted by reports that Nigeria's rebel group Niger Delta Avengers threaten to attack the nation's oil sector in the next few days.

Markets also received support from a decline in crude inventories. U.s. crude inventories declined by 5.1 million barrels in the latest week to 411.5 million, according to API.

Despite the overall upbeat sentiment in the markets, analysts warned that the recent rally, which has raised crude by around 14 percent since early December, may be on the verge of a correction.

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COLOMBIA: Colcap Trades 0.29% Higher Boosted By Ecopetrol

Colcap, the main index of the Colombian Stock Exchange, rose 0.29% near the end of Monday's trade, moving at 1,555.54 points, boosted by a rally in Ecopetrol's shares, amid higher oil prices, said Marcela Ram?rez, an analyst at Acciones & Valores.

The shares of Ecopetrol (+5.07%), ETB (+1.97%), and Davivienda (+0.98%) rose, while Preferencial Bancolombia (-1.35%) and Cemargos (-1.03%) fell.

The locally traded. U.S. dollar closed at 2,852.45 Colombian pesos, marking a 0.11% rise.

Wilson Tovar, an analyst at Acciones & Valores, noted that the greenback lost ground at the beginning of the week after investors evaluated the impact of the partial closure of the United States government.

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Japan December Trade Surplus Y358.971 Billion

Japan posted a merchandise trade surplus of 358.971 billion yen in December, the Ministry of Finance said on Wednesday - down 43.5 percent on year.

The headline figure was shy of expectations for a surplus 520.0 billion yen following the 113.4 billion yen surplus in November.

Exports climbed 9.3 percent on year to 7.302 trillion yen, also missing forecasts for a gain or 9.8 percent and down from 16.2 percent in the previous month.

Exports to Asia advanced 9.9 percent on year to 4.111 trillion yen, while exports to China alone jumped an annual 15.8 percent to 1.507 trillion yen.

Exports to the United States gained 3.0 percent on year to 1.411 trillion yen and exports to the European Union jumped an annual 11.4 percent to 792.213 billion yen.

Imports advanced an annual 14.9 percent to 6.943 trillion yen versus expectations for a gain of 12.4 percent and down from 17.2 percent a month earlier.

Imports from Asia climbed 15.7 percent on year to 3.379 trillion yen, while imports from China alone gained an annual 14.8 percent to 1.704 trillion yen.

Imports from the United States were up 7.5 percent to 699.419 billion yen, while imports from the European Union gained 9.8 percent to 786.388 billion yen.

Also on Wednesday, the latest survey from Nikkei said that the manufacturing sector in Japan continued to expand in January, and at an accelerated rate, with a manufacturing PMI score of 54.4.

That's up from 54.0 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Individually, output expanded at the quickest rate in 47 months, while new orders continued to rise sharply.

Inflationary pressures intensified.

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BRAZIL: Ibovespa Spikes 3.7% And Sets New Record Following Lula Conviction

Ibovespa, the benchmark stock market index in Brazil, rose 3.72% to 83,680 points Wednesday, a new settlement record amid a R$ 15.69 billion trading volume - nearly twice the average.

The rally was the result of a higher court unanimously upholding former president Lula's conviction for corruption and money laundering, which may reduce the chances of the center-left leader competing in this year's election.

"The markets have reacted positively to Lula's trial. The conviction lessens the likelihood of him becoming a presidential candidate, and this reinforces the expectation that a more centrist candidate be elected," said Guide Investimentos analyst Ign?cio Crespo.

According to chief economist of Gradual Investimentos, Andr? Perfeito, "we will still have many developments in Lula's campaign to become a presidential candidate. Today's episode may have been dramatic, but it is far from definitive."

In the conviction, the three judges increased the former president's prison sentence for 12 years and a month and indicated that he could be arrested after all the resources have been exhausted in TRF4. According to H. Commcor's chief operating officer, Ari Santos, the result was "predictable," but encouraged the markets.

The locally traded U.S. dollar reached minimum levels in the year against the Brazilian after Lula's conviction in the second instance. The greenback fell 2.43%, closing at R$ 3.1600, after reaching the intraday low of R$ 3.1530 (-2.73%).

For Friday, Santos projects that the index may fall into a profit-taking movement. For Crespo, however, the index may remain positive.

"The scenario remains optimistic for Brazil in the short and medium term," says the analyst.

The Ibovespa will remain closed Thursday for a local holiday.

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BoJ Minutes: Japan Economy Expected To Continue Expansion

Members of the Bank of Japan's Monetary Policy Board said that Japan's economy is expanding moderately and should continue to do so, minutes from the bank's December 20-21 meeting revealed on Friday.

"The Bank will make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target," the minutes said

At the meeting, the central bank decided to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

It also voted to maintain its aggressive monetary easing, as inflation remains well below the 2 percent target. The bank will hold its target of raising the amount of outstanding JGB holdings at an annual pace of about JPY 80 trillion.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

"The year-on-year rate of change in the CPI for all items less fresh food was in the range of 0.5-1.0 percent, while the rate of change for all items less fresh food and energy remained slightly positive," the minutes said.

The board also noted that inflation expectations are in a weakening phase, although prices are expected to maintain an upward trend over the longer term.

The bank added that private consumption has been increasing moderately and business fixed investment continued an increasing trend with corporate profits and business sentiment improving.

"With regard to the outlook, the year-on-year rate of change in the CPI (all items less fresh food) was likely to continue on an uptrend and increase toward 2 percent, mainly on the back of an improvement in the output gap and a rise in medium- to long-term inflation expectations," the minutes said.

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