Local Debt: More Short-End Compression Ahead

Colombia's weak consumer price inflation print for November, at just 0.14% month-on-month, supports our out-of-consensus view that the next move from the central bank (BanRep) will be a rate cut (see our online service, November 14, 'Cuts Expected In 2014'). As a result we expect further compression of the sovereign local debt yield curve, particularly at the short end, as investors start to price in more accommodative monetary policy heading into 2012.

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