Peruvian electionsApril 23 – Bloomberg (Maria Elena Vizcaino and Ezra Fieser): “Peru’s currency hit a record low as investors dumped everything from stocks to sovereign bonds after a little-known leftist candidate gained a clear lead in presidential polls, rattling investor confidence… Pedro Castillo, a former school teacher whose party has praised Latin American leftists such as Hugo Chavez, came from no-where to lead the first-round election on April 11. Now, he is ahead in the polls for the runoff and investors are spooked.”
The Peruvian currency (sol) sank 4.1% this week, closing Friday at an all-time low versus the dollar. Peru’s 10-year local currency yields surged 54 bps this week to 5.41%, up from 3.50% to begin 2021 - to the high since the March 2020 yield spike. Peru sovereign CDS jumped 17 bps to an 11-month high 93 bps. Outside of last year’s Covid spike, Peru CDS traded this week near four-year highs. Peru’s major equities indices dropped more than 10% this week. Colombia CDS rose eight bps, and Uruguay gained seven bps.