EM LATAM CREDIT: Ecuador: New Government Actions - Positive
(ECUA; Caa3/B-neg/CCC+)
"Government announces funds for productive loans and guarantees for energy projects" - Teleamazonas
- USD100mn funding for entrepreneurs
- Technical support for women head of households and people between ages 18-29.
- USD77mn liquidity guarantee from the IADB as a backstop in case of default for 12 renewable energy projects in Ecuador that was part of a USD140mn credit line supporting a USD1.1bn investment to install capacity exceeding 810MW, according to Teleamazonas.
We posted a week ago about plans to connect Ecuador's electric transmission system with Peru. Please see our post for more information: https://mni.marketnews.com/4eAosTL
Among those announcements, Ecuador spokesperson Carolina Jaramillo also talked about the country's main refinery coming back online next month after being affected by an earthquake in April and a fire last month.
Jaramillo went on to discuss President Noboa's international trip these next two weeks which will include a visit to China, Spain and Italy to encourage foreign direct investment in Ecuador, particularly in oil, mining and renewable energy.
ECUA 2030s were last quoted USD84.31 which was almost unchanged today, up 25 points QTD and 14.5 points YTD.
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US FISCAL: Total Tariff Income Jumping In May As New Rates Hit
Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
- For the fiscal year as a whole so far, customs duties have totaled just under $93B, per the Treasury Daily Statement.
US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
Treasury's latest estimate of the size of "extraordinary measures" available to use "in order to prevent the United States from defaulting on its obligations as Congress deliberate[s] on increasing the debt limit" is down to $67B on May 21 (of an available $299B), vs $82B a week earlier.
- The amount hit the 2nd lowest level since the debt limit impasse started, at $46B, on May 20 (the low was $34B on Feb 24).
- With $476B in cash in the Treasury General Account on May 21, that left the total resources available to Treasury at $543B, the least since April 14 - the day before the annual April 15 tax deadline.
- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
