EM LATAM CREDIT: BRAZIL: Fiscal In Focus Next Week, Retail Sales Tomorrow
After meeting with Finance Minister Haddad to discuss the economic agenda, Institutional Relations Minister Gleisi Hoffmann said that the government would present the income tax reform next week. She also said that the administration does not expect to discuss new spending cuts with Congress, as it has already made the relevant fiscal adjustments. Congress is also due to vote on the 2025 budget sometime next week.
• Amid a further risk-off move in equity markets, and following soft services volume data earlier, DI swap rates have rallied 6-10bp in the belly and long-end in a bull-flattening move. Swaps continue to price in a slowdown in the BCB hiking pace, after a widely expected 100bp Selic rate increase next week.
• Meanwhile, USDBRL has unwound most of its earlier gains to trade just 0.1% higher on the session at 5.81. A bearish trend cycle remains in play, with eyes on 5.6755, the Feb 18 low and short-term bear trigger. Key short-term resistance is at 5.9179, the Feb 28 high.
• Today’s data showed a slowdown in the services sector in January from December, but an improvement is seen in February. The data follow weaker-than-expected IP data earlier this week, but stronger PMI figures, painting a mixed picture of the economy at the start of the year. In the calendar tomorrow, retail sales and budget balance figures, both for January, are due.
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PIPELINE: Corporate Bond Issuance Update $1.75B Zimmer Biomet 3Pt Launched
- Date $MM Issuer (Priced *, Launch #)
- 02/11 $5B #Israel $2.5B 5Y +120, $2.5B 10Y +135
- 02/11 $1.75B #Zimmer Biomet $600M 2Y +45, $550M 5Y +72, $600M 10Y +97
- 02/11 $1.25B #Tennessee Valley Authority 30Y +60
- 02/11 $1B Snap Inc 8NC3 7%
- 02/11 $800M #Flowers Food 10Y +125, 30Y +150
US: FED Reverse Repo Operation
RRP usage falls to new low at $76.446B this afternoon from Monday's $99.653B - compares to prior low of $78.788B last week Wednesday, the lowest level since mid-April 2021. The number of counterparties falls to 36 from 41 prior.
GBPUSD TECHS: Trading Below Last Week’s High
- RES 4: 1.2667 High Dec 19
- RES 3: 1.2610 38.2% retracement of the Sep 26 ‘24 - Jan 13 bear leg
- RES 2: 1.2576 High Jan 7
- RES 1: 1.2550 High Feb 5
- PRICE: 1.2420 @ 16:10 GMT Feb 11
- SUP 1: 1.2333/2249 Low Feb 11 / Jan 3
- SUP 2: 1.2161 Low Jan 17 / 20
- SUP 3: 1.2100 Low Jan 10 and the bear trigger
- SUP 4: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
GBPUSD has improved off lows, but remains well below the Feb 5 high. The pair has recently traded above the 20- and 50-day EMAs, and pierced 1.2523, the Jan 27 high. A resumption of gains would signal scope for a move towards 1.2610, a Fibonacci retracement. On the downside, key short-term support to watch has been defined at 1.2249, the Jan 3 low. Clearance of this level would instead highlight a reversal and strengthen a bearish threat.
