EM LATAM CREDIT: Brazil: Free from Bird Flu - Neutral
(BRAZIL; Ba1/BB/BB)
"*MAPA: GOVERNMENT INFORMS WHO THAT IT IS FREE FROM BIRD FLU" - Bbg
The Brazil Agriculture, Livestock and Food Supply (MAPA) already announced it was planning to declare the country free of bird flu.
Brazil is a major exporter of poultry so this issue is important but now and in past years the country has gotten better at handling these situations with standard protocols in place to investigate and contain food contaminant situations.
We didn't see any observable impact from this latest episode which began about a month ago on either sovereign bonds or the bonds of major poultry exporter BRF.
BRAZIL 2035s were last quoted T+227bp, 10bp tighter since the re-tap a few weeks ago, 20bp tighter QTD and 7bp wider than new issue pricing February 2025.
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US STOCKS: S&P Futures Reverse Moody’s Hit With Dip Buying, 6000 Next Resistance
- ESM5 has hit highs of 5986.75 to push above Friday’s high of 5977.50 seen an hour ahead of the Moody’s US downgrade, via an overnight low of 5892.75.
- Next up is the round 6000 after which lies 6057.00 (Mar 3 high). Support at 5837.25 (Mar 25 high) wasn’t troubled overnight.
- Within the S&P 500, health care (+0.7%, led by UnitedHealth +7.4%), consumer staples (+0.4%) and materials (+0.3%) lead.
- Within consumer staples, Walmart has pared losses to -0.1% after an intraday recovery of 2.5%. Trump said Saturday: “Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain” and that it should "EAT THE TARIFFS", adding, "I'll be watching”.
- Losses are seen in energy (-1.5% despite WTI +0.8%) and consumer discretionary (-0.2%).
- Apple (-1.3%) and Tesla (-2.9%) weigh on IT and consumer discretionary. App Store legal discussions and Alphabet-linked revenues are in focus for the former.
- E-mini summary; S&P 500 (+0.1%), Nasdaq 100 (+0.1%), Dow Jones (+0.4%) and Russell 2000 (-0.6%)
EURUSD TECHS: Starts The Week On A Bullish Note
- RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1608 High Nov 9 2021
- RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- RES 1: 1.1293/1381 High May 9 / High May 2 - 6
- PRICE: 1.1280 @ 16:36 BST May 19
- SUP 1: 1.1096/65 50-day EMA and a pivot level / Low May 12
- SUP 2: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
- SUP 3: 1.0943 Low Apr 10
- SUP 4: 1.0857 50.0% retracement of the Feb 3 - Apr 21 bull cycle
EURUSD has started the week on a bullish note. The pair remains above last week’s low and recent weakness appears corrective. A key support at the 50-day EMA, at 1.1096, is intact. A clean break of this average would undermine the uptrend. Key trend signals continue to highlight an uptrend and, a key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction and highlight a bullish break.
OPTIONS: Plenty Of Call Structure Trade In Sonia Ahead Of UK CPI This Week
Monday's Europe rates/bond options flow included:
- OEM5 116.00/117.75/117.25/118.75 put condor vs. 120.00/121.50 call spread, paper sells the put condor, buys the call spread for 32 on 13.5K.
- RXN5 132.00/133.50 call spread paper paid 20 on 3K
- SFIM5 95.90/96.00/96.10 call fly, paper pays 1 for 5k
- SFIU5 96.15/96.35/96.55 call fly paper paid 2.75 on 5K
- SFIU5 96.00/96.10 call spread sold at 5 in 8k
- SFIZ5 96.20/96.30 call spread vs. SFIZ5 95.75 puts, paper bought the call spread to sell the puts, paying 0.5 on 4K.
