July US inflation was mostly in line with expectations, at 0.2% monthly headline and 0.3% core, while annual inflation was 2.7% headline (vs 2.8% exp) and 3.1% core (vs 3.0% exp), the initial reaction was a rally in the treasury curve, but slowly longs were sold, ending in a bull steepener in which short rates fell 4bps and long rates rose 3bps, widening the 2y-30y spread to 115bps. In equities, global indices rallied, led by the Japanese Nikkei (+2%), and the US indices were once again led by the Nasdaq (1.3%).

Venezuela and PDVSA finished marginally higher, with volumes remaining limited, which were concentrated in the middle part of PDVSA.

 

Latin American credits rose 0.25-0.5pts, with Ecuador sovereign and Pemex standing out.