EM LATAM CREDIT: Colombia (Baa2 neg /BB+ neg /BB+ neg) Govt Transparency
"Colombia to Embrace Fiscal Transparency in a Bid to Regain Trust" – BBG
• We anxiously await the publication of the government’s medium term fiscal plan in June. The fiscal deficit for 2024 was 6.8% and the CARF (Autonomous Committee for the Fiscal Rule) judged in April 2025 that the government would need a COP46tn (USD11.1bn) fiscal adjustment. We fear that both the deficit and debt/GDP could be significantly worse now.
• In the last fiscal plan published in February, the government projected a 5.1% fiscal deficit, 60.5% debt/GDP, 3.6% inflation and 2.5% real GDP growth, none of which has happened. Inflation has not fallen as expected so the central bank policy rate has not dropped as expected, which has kept interest costs elevated.
• The IMF projected for 2025 2.4% real GDP growth and 4.7% consumer price inflation. They recently went subject on Colombia’s Flexible Credit Line (FCL) pending a review of government fiscal policies. Colombia is overdue on USD1.9bn of payments from the FCL approved in 2020.
• Meanwhile, oil prices are down 17% YTD, and the COP/USD is weaker than it was for most of last year, making that external debt of 48% of the total more expensive.
• While it may be partly true that the premium paid for the country to borrow from the international market is elevated due to lack of transparency, it seems to us that the issue is more with the large fiscal deficit and the failure to take corrective measures as there doesn’t seem much flexibility to cut spending and recent efforts at passing tax reform have failed.
• Colombia 8% 2035 bonds were last quoted T+399bps, 35 bps wider MTD and 66bps wider YTD. Those bonds are quoted157 bps wider than Brazil (BRAZIL; Ba1pos/BB/BB) 2035s and 25 bps tighter than El Salvador (ELSALV; B3 /B- /B-) 2035s.
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US STOCKS: Late Equities Roundup: Interactive Media, Chip Stocks Outperforming
- Stocks continued to pare losses Monday, the Dow lagging modest gains in SPX eminis and Nasdaq indexes in the second half. Markets were cautious in reacting to tariff related headlines after reacting to unsubstantiated morning headlines that suggested Pres Trump was considering a 90 day pause in tariffs - stocks surged as wires reposted the false rumor but quickly retraced.
- Currently, the DJIA trades down down 216.96 points (-0.57%) at 38130.77, S&P E-Minis up 11 points (0.22%) at 5125.75, Nasdaq up 105.5 points (0.7%) at 15707.5.
- Communication Services and Information Technology sectors outperformed in late trade, interactive media and entertainment share buoyed the former: Meta Platforms +3.26%, Netflix +3.01%, Take-Two Interactive Software +2.88%, TKO Group Holdings +2.35% and Alphabet +1.86%.
- Semiconductor stocks Super Micro Computer surged 12.21%, Microchip Technology +7.26%, Lam Research +7.11%, KLA +6.55% and Arista Networks +6.51%.
- Materials and Energy sectors underperformed in late trade, Smurfit WestRock -3.21%, Dow and Amcor both -2.66%, International Flavors & Fragrances -2.61% led laggers in the Materials sector
- Meanwhile, oil and gas shares weighed on the Energy sector: Schlumberger -3.82%, Occidental Petroleum -3.50%, Devon Energy -2.01%, Chevron and APA Corp both -1.75%.
TARIFFS: Trump-Netanyahu Joint Press Conference Underway Shortly
US President Donald Trump is shortly due to hold a joint press conference with Israeli Prime Minister Benjamin Netanyahu at the White House. LIVESTREAM. Today's visit is Netanyahu's second since Trump took office in January.
- Haaretz speculates that the meeting is designed to give Trump a political win amid the fallout from his tariffs: "The planned meeting between U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu on Monday is unusual, not only because it was arranged last minute, but mainly due to the reversal of circumstances. It isn't Netanyahu who needs Trump this time, but rather Trump who needs Netanyahu."
- The New York Times notes: "Looming over the meeting this week is a point of tension: Mr. Trump’s sweeping tariffs, which did not spare Israel. Mr. Netanyahu’s office said the two men plan to discuss the tariff issue, the war in Gaza, Israel-Turkey relations, Iran and the International Criminal Court."
- Netanyahu said on the tariffs: “I can tell you that I am the first international leader, the first foreign leader, who will meet with President Trump on the issue, which is so important to the Israeli economy. There is a long line of leaders who want this regarding their economies. I think that it reflects the special personal link, as well as the special ties between the U.S. and Israel.”
USDJPY TECHS: Trend Needle Points South
- RES 4: 151.30 High Mar 3
- RES 3: 150.43/151.21 50-day EMA / High Mar 28 and reversal trigger
- RES 2: 149.12 20-day EMA
- RES 1: 148.18 Low Mar 20
- PRICE: 147.73 @ 16:50 BST Apr 7
- SUP 1: 144.56 Low Apr 4
- SUP 2: 144.13 76.4% retracement of the Sep 16 ‘24 - Jan 10 bull leg
- SUP 3: 143.43 Low Oct 2 ‘24
- SUP 4: 142.95 1.00 proj of the Feb 12 - Mar 11 - 28 price swing
USDJPY maintains a softer tone following last week’s sharp sell-off and is trading just ahead of its recent lows. A resumption of the downtrend and a break of Friday’s 144.56 low would signal scope for an extension towards 144.13, a Fibonacci retracement point. Initial firm resistance to watch is 149.12, the 20-day EMA. Short-term gains would - for now - be considered corrective.
