In December, international investors slightly reduced their holdings of Colombian TES to 26.2%, from 26.6% in November. In nominal terms, the reduction is equivalent to c.COP2.2trn, with the larger reduction seen in nominal TES while UVR had a small gain in positions. For the month, the main TES buyers were insurance companies and commercial banks, while the main sellers were the MinFin and international investors. From front to back, there was no significant move to the TES curve, but bonds at the belly of the curve (TES 27s to 31s) experienced a slight underperformance. In addition, the COP saw lower volatility and closed the month almost unchanged. During the previous BanRep policy meeting, in a surprising three-way split decision, the key rate was hiked by 100% to 12%. With the indexation process derived from the minimum wage increase (16%) kicking-in, inflation is expected to trend higher and remain well above the central-bank target level, leaving few options for the central bank other than to continue with the hiking cycle which could add some pressure to the front end of the TES curve.