MEXICO: Banxico Quarterly Inflation Report Due at 1930BST/1430ET
May-28 18:12
- Banxico will publish its Q1 inflation report at the bottom of the hour, which JP Morgan believes should reinforce the case for the policy rate to decline to a less restrictive stance, but one that still stays above neutral. In JPM’s view, that means near the neutrality threshold at 7% by year-end. Banxico has communicated that weak economic activity is conducive to diminished underlying CPI pressures - hence, convergence to target can be achieved with a less restrictive stance than earlier thought. JPM expects the Bank to reduce the midpoint for GDP growth this year to +0.1%, from +0.6%, still above JPM’s -0.5% forecast.
- BBVA says that the QIR will provide key signals on the pace of future rate cuts in Mexico. They also believe that the central bank’s GDP forecast (currently -0.2% to +1.4%) may be revised lower, and expect Banxico to continue its easing cycle, targeting a 7.5% policy rate by year-end.
- Meanwhile, Natixis expects Banxico to lower its 2025 growth forecast to around zero, or possibly negative. They also expect a downward revision for 2026 (currently +1.0-2.6%) and will be watching for any increase in the inflation forecast from the one published in the May MPC communiqué, as inflation has exceeded expectations in the previous two readings. Natixis forecasts a 50bp cut in June and to signal a moderation in the pace of cuts to 25bp in August.
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PIPELINE: Corporate Bond Update
Apr-28 18:06
$17.025B to price Monday:
- Date $MM Issuer (Priced *, Launch #)
- 04/28 $5B #Alphabet $750M 5Y +32, $1.25B 10Y +47, $1.5B 30Y +62, $1.5B 40Y +70
- 04/28 $2.5B #Philip Morris $750M 3Y +58, $400M 3Y SOFR+83, $750M 5Y +75, $600M 10Y +93
- 04/28 $2B #Keurig Dr Pepper $500M each: 1.5Y SOFR+58, 3Y +68, 5Y +83, 10Y +98
- 04/28 $1.25B #Procter & Gamble $700M 5Y +28, $550M 10Y +43
- 04/28 $1.125B #Consumer Energy $500M +5Y +67, $625M 10Y +87
- 04/28 $1.1B #Northern States Power $600M 10Y +83, $500M 30Y +98
- 04/28 $1.1B #CBRE Services $600M 5Y +120, $500M 10Y +135
- 04/28 $750M #General Dynamics 10Y +78
- 04/28 $700M *Posco Holdings $400M 5Y +137.5, $300M 10Y +157.5
- 04/28 $700M *Kookmin Bank $400M 3Y +77.5, $300M 5Y +82.5
- 04/28 $500M #Colgate Palmolive 5Y +38
- 04/28 $500M #DR Horton +5Y +103
- 04/28 $Benchmark Goldman Sachs investor calls
BONDS: EGBs-GILTS CASH CLOSE: Bear Steepening Ahead Of Euro Inflation
Apr-28 18:04
European yields backed up slightly Monday, reversing the modest declines seen Friday.
- Various factors weighed on core FI in a session that was devoid of market-moving data (Spanish Q1 unemployment saw a notable uptick).
- These factors included slightly more positive risk-on tone on US tariffs coming in from the weekend, and reports Monday morning of a Ukraine proposal for a full 30-day ceasefire with Russia.
- While a widespread Spanish and Portuguese energy blackout made headlines, the market impact was limited.
- The German and UK curves both bear steepened, though Schatz/Bobl notably underperformed their UK counterparts.
- Periphery/semi-core EGBs were mixed and little changed on the day.
- The April Eurozone flash inflation round starts Tuesday with Spain - MNI's preview is here.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 2.3bps at 1.742%, 5-Yr is up 4.2bps at 2.059%, 10-Yr is up 5.2bps at 2.521%, and 30-Yr is up 5.8bps at 2.947%.
- UK: The 2-Yr yield is up 0.8bps at 3.866%, 5-Yr is up 1.2bps at 3.986%, 10-Yr is up 3bps at 4.509%, and 30-Yr is up 5.1bps at 5.27%.
- Italian BTP spread up 0.3bps at 110.8bps / Spanish spread up 0.6bps at 66bps
EURGBP TECHS: Doji Candle Formation
Apr-28 18:00
- RES 4: 0.8800 Round number resistance
- RES 3: 0.8781 2.236 proj of the Mar 3 - 11 - 28 price swing
- RES 2: 0.8768 High Nov 20 ‘23
- RES 1: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
- PRICE: 0.8500 @ 16:45 BST Apr 28
- SUP 1: 0.8494 Low Apr 28
- SUP 2: 0.8477 61.8% retracement of the Mar 28 - Apr 11 rally
- SUP 3: 0.8457 50-day EMA
- SUP 4: 0.8415 76.4% retracement of the Mar 28 - Apr 11 rally
GBP strength Monday has prompted EUR/GBP to trade through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323. Monday weakness exposes the 50-day EMA at 0.8457. A doji Japanese candle pattern on Friday, highlights an early reversal signal and if correct, the end of the correction. A resumption of gains would refocus attention on 0.8738, the Apr 11 high and bull trigger.
