Market Pulse

Research evidence excerpt

Market Pulse

But that won't be evident until the next few weeks or months pass, and a new Budget is revealed in

November. Still what triggered the sell-off in the GBP and Gilt market today was Burnham's saying that he will seek “any

flexibility” while following the government’s borrowing and spending rules, suggesting that he is looking for ways to "work

around" the rules.

Finally, we are turning our attention to Chile today.

Over the past few weeks, traders’ sentiment about Chile and the CLP has largely been negative, and shaped by (1) the

outlook for President José Kast’s pro-growth and pro-market domestic policy agenda, and (2) commodity price shifts,

driven partly by higher crude oil prices with the US-Iran war and partly by other commodity-related factors. The election

and installation of Kast’s government in December 2025 and March 2026, respectively, should have been positive for the CLP,

and it was at first. But the US-Iran war, by causing an adverse terms-of-trade shock for an economy that imports much of its

basic energy and other supply-side shocks, has interfered with the policy agenda by shifting the policy focus to energy, and

away from fiscal reform. It has also put the economy into a recession. The deep structural reforms – the kind that Kast would

champion if he had a super-majority of support in Congress – are out of reach for now. But that doesn’t mean that everything

in Chile is bad. Some of President Kast’s key reforms may still pass in Congress soon; the current account is in surplus due to

high prices for copper and lithium, despite high oil prices and reduced mining output. And should the US-Iran War wind down,

most adverse supply shocks should dissipate. The hinge still seems to be the price of crude oil. If it were to come down