EM LATAM CREDIT: Colombia: Credit Ratings Cut - Positive

• MBA composite mortgage applications dipped -1.2% last week (sa) after a heavier -5.1% the week prior.
• The breakdown was more mixed than usual, with new purchase applications rising 2.7% after -5.2% whilst refis saw further weakness with -7.1% after -5.0%.
• Relative levels: composite at 50% of 2019 average levels, new purchases at 63% and refis at 37%.
• The 30Y confirming mortgage rate increased 6bps to 6.98% as it started to reflect what has been a sharper climb in 10Y swap rates although one that fizzled out last week with no change in average rates for the latter.
• It saw the confirming rate to swap spread rise 6bps to 302bps having tightened 19bps from 3.15% to 2.96% in the first half of May. 

Roll pace Update, pretty much all done. All the Volume in US Treasuries is just spread related, and September is front Month.

• WNA: 86%%.
• USA: 87%.
• UXY: 81%.
• TYA: 82%.
• FVA: 82%.
• TUA: 81%.
• Gilt 95%.

• In the FI space, recent gains in Bund futures suggest the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. This week’s climb reinforces a bullish theme. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.
• A bear cycle in Gilt futures remains in play and last week’s move lower reinforces the bearish theme. The contract has recovered from its recent lows - gains are considered corrective and this is allowing a short-term oversold condition to unwind. The bear trigger has been defined at 90.11, the May 22 low. Key short-term resistance to watch is 91.87, the May 20 high. It has been pierced, a clear break of this level is required to highlight a stronger reversal.