EM LATAM CREDIT: Brazil Government Will Propose Alternative to IOF Tax Hike
Republic of Brazil (BRAZIL; Ba1/BB/BB)
"Brazil plans education fund cap, perk cuts to avert tax hike" - Valor
Limits to school funding and changes in tax exemptions were proposed by Finance Minister Haddad and congressional leaders in place of the government's proposed and unpopular financial transactions tax hike (IOF), according to news outlet Valor.
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STIR: SOFR Option Update: Leaning Bearish
Short end underlying rates trading at/near post ISM services data lows, projected rate cut pricing steady to mildly lower vs. morning levels (*) as follows: May'25 steady at -0.5bp, Jun'25 at -8.2bp (-8.4bp), Jul'25 at -23.8bp (-25.5bp), Sep'25 -43.8bp (-46.9bp).
- -10,000 SFRU5 96.43/96.62 call spds, 3.25
- +4,000 SFRU5 95.75/95.87 2x1 put spds, 0.5 ref 96.14
- 2,000 SFRH6 97.18/98.25 call spds vs. 0QH6 97.25/98.25 call spds, 2.5 net/0QH6 over
- +2,500 SFRH6 97.50/98.00 call spds, 7.5 ref 96.67
- +5,000 SFRN5 95.75/95.87 put spds 2.0 vs. 96.195/0.05%
- +4,000 0QM5/0QU5 97.00/97.50/98.00 call fly spd, 0.5 net
US 10YR FUTURE TECHS: (M5) Support Remains Exposed
- RES 4: 113-22 1.382 proj of the Apr 11 - 16 - 22 price swing
- RES 3: 113-04 76.4% retracement of the Apr 7 - 11 bear leg
- RES 2: 112-20+ High MAy 1 and key new-term resistance
- RES 1: 112-01+ High Apr 2
- PRICE: 111-00+ @ 11:36 BST May 5
- SUP 1: 110-31/30+ Low May 5 / 50-day EMA
- SUP 2: 110-16+/109-08 Low Apr 22 / 11 and the bear trigger
- SUP 3: 110-00 100-dma
- SUP 4: 108-26+ 76.4% retracement of the Jan 13 - Apr 7 bull cycle
A sharp reversal lower in Treasury futures last week undermines the recent bull cycle. The contract has breached the 20-day EMA, and sights are on support at the 50-day EMA, at 110-30+. A clear breach of this average would strengthen a bearish threat and expose 110-16+, the Apr 22 low. For bulls, price needs to trade above key short-term resistance at 112-20+, the May 1 high, to reinstate a bullish theme.
EUR: FX Exchange traded Option
EURUSD (9th May) 1.1400p, sold at 0.0079 in ~1.1k.
