Since we last looked in, Colombian markets have had a dizzying run in currency and equity prices. Where do we go from here?

On the one hand the peso is supported by "Brazilification" of the central bank, which has taken nominal and real rates up sharply in response to widening fiscal imbalances. On the other hand, Colombia is not Brazil in terms of its domestic cycle. Local credit and activity growth are stronger, inflation is rising, the external balance is under more pressure and we do worry a bit more when the peso appreciates so rapidly. As a result we're taking a bit of profit in our COP carry position and will watch carefully for any signs of reversal ahead.

On the equity front the market simply looks overextended, and we don't see this as a good entry point in light of the run in valuations already behind us.

And as before dollar sovereign spreads appear tight given Colombia's strong ongoing external issuance.