EM LATAM CREDIT: Argentina: S&P Rating Upgrade – Positive
(ARGENT; Caa1/CCC+/CCC+)
• From a market perspective we wouldn’t expect much impact but for the credit profile it is a small positive sign of improved perception of the country. A significant USD bond issuance to demonstrate access to the international market would likely be the trigger for further rating upgrades as it would allay concerns about reserves accumulation and refinancing risk.
• ARGENT 35s were quoted at $74.5, unchanged today but up almost 3 points this week as the market reacted positively to planned FX regime changes and reserves accumulation.
• In the short run, the FX band being linked to the inflation rate will likely accelerate the widening of the band and begin to look more like a free float which may pave the way for international bond issuance. For now, the local FX market has taken the news well with little change in the ARS, even after the government said they would more actively and consistently buy USD in the open market to accumulate reserves in 2026.
• S&P recognized the improved political environment for the ruling party which may pave the way for further economic and financial reforms. The rating agency also praised lower inflation and consistent maintenance of a fiscal surplus. We commented on the most recent primary budget fiscal surplus data: https://mni.marketnews.com/44y59Xe
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FOREX: EURJPY Reaching Record Territory Above 180.00 [2/2]
- Amid the uncertainty surrounding US data releases and through which lens any surprises may be interpreted, short-term technical levels for USDJPY appear well defined, with the topside focus on 156.75, the Jan 23 high and the 20-day EMA providing support at 153.49.
- The domestic backdrop continues to prove challenging for the yen, with Q3 GDP data disappointing and the escalation in Japan-China tensions raising concerns. Furthermore, overnight reports suggesting a group of lawmakers in Japan’s ruling Liberal Democratic Party have urged PM Takaichi to craft an extra budget much larger than what’s been indicated thus far as she puts the finishing touches on her economic package.
- Combined with the resilience to broader developments for risk, the likes of EURJPY, AUDJPY and CHFJPY remain standout candidates to further test the MOF’s resolve. EURJPY in particular is continuing to grind to fresh record highs, printing a 180.10 high this morning and trading at levels well above the previous set of intervention episodes.
- MUFG believe that their view of a strengthening Euro over the coming year and the yen continuing to trade at “very, very weak levels historically”, points to more upside risk for EURJPY, “even at levels above 180”.
- Targets for the cross rely on technical projections at this point, with 180.37, 181.01 and 181.70 the next levels of note based on the Jul 31 - Sep 29 - Oct 2 price swing.
FOREX: Cross/JPY Immune to Latest Equity Pullback and FX Jawboning [1/2]
- USDJPY has spent the majority of Tuesday’s session consolidating the break above 155.00, with the Japanese yen proving immune to the recent weakness for major equity benchmarks and the more forceful verbal warnings on one-sided adjustments for the currency.
- As a reminder, Japan’s Finance Minister strengthened her rhetoric on the yen’s slide. “I’m seeing extremely one-sided and rapid movements,” Katayama told reporters on Tuesday, adding she is “deeply concerned about the situation.”
- Additionally, BOJ Governor Ueda has given little away concerning the bank’s hiking outlook, reiterating the focus on a smooth landing towards the inflation target to PM Takaichi. Ueda also noted that the two discussed FX but wouldn't comment on specifics, instead reaffirming that it is desirable for FX to move in a stable manner, reflecting fundamentals.
- ING’s view remains that the MoF prefers to intervene in the FX market after a USD-negative event (such as a soft jobs/inflation print), like it did in July 2024. Also, any line in the sand may be closer to 160, and they think further upside pressure in the coming days is very possible.
EU-BOND SYNDICATION: 2.50% Oct-30 EU-bond tap: Priced
- Re-offer: 99.870 to yield 2.527%
- Spread set earlier at MS + 12bps (guidance was MS + 15bps area)
- Tap Size: E5bln (WNG) (MNI expected E5-6bln)
- Books in excess of E83bln (inc E6.75bln JLM interest)
- Reference: 2.20% OCt-30 Bobl (DE000BU25059) Spot ref 99.605 / 2.283% / +24.4bps / HR 99%
- Settlement: 25 Nov 2025 (T+5)
- ISIN: EU000A4EG021 (immediately fungible)
- JLMs: GSBE SE / HSBC / J.P. Morgan (DM/B&D) / Natixis / UBS
- Timing: TOE 12:54 GMT / 13:54 CET. FTT Immediately
