EM LATAM CREDIT: Falabella: Rating Changes – Positive
(BFALA; NR/BB+pos/BBB-)
• Fitch upgraded ratings to BBB- from BB+ due to a stronger financial profile for the Chilean retailer with better operating results leading to lower leverage.
• S&P revised their outlook to positive from stable for similar reasons.
• BFALA 32s were last quoted T+123bp, 13bp tighter post the upgrade, 20bp tighter since June 30th and 72bp tighter YTD. Bonds are still 42bp wide to IG rated Cencosud (CENSUD; Baa3/NR/BBB).
• In February we called attention to Falabella’s strong Q4 2024 results: https://mni.marketnews.com/3Wwgse8
• August 13th we posted about strong Q2 2025 results and our expectation of ratings upgrades: https://mni.marketnews.com/4okf2zI
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US STOCKS: Late Equity Index Rebound
Stocks actually stage late session recovery - as focus turns toward fundamentals instead of political turmoil:
- DJIA up 87.76 points (0.19%) at 46284.74
- S&P E-Mini Future up 27 points (0.4%) at 6719.5
- Nasdaq up 61.3 points (0.3%) at 22588.13
US TSYS: Curves Twist Steeper Heading into Likely Gov Shutdown at Midnight
- US Govt likely to shutdown at midnight tonight - the first time since late Dec 2018 when the government shutterd for 35 consecutive days. Senate majority whip Barrasso: "SENATE TO VOTE THIS WEEKEND ON REOPENING GOVERNMENT", Bbg.
- The BLS plans to postpone key economic releases in the event of a shutdown: "BLS will suspend all operations. Economic data that are scheduled to be released during the lapse will not be released. All active data collection activities for BLS surveys will cease. The BLS website will not be updated with new content or restored in the event of a technical failure during a lapse." LINK
- That said, most of Wednesday's scheduled data should be released as most are generated by non-govt firms, Construction Spending the lone exception tomorrow as the U.S. Census Bureau the source. Updates to follow if/when an announcement of a closing is made.
- Treasuries trading mixed after the bell, curves twist steeper (2s10s +2.591 at 54.207) as Bonds led the decline in the second half, Tsy Dec'25 10Y contract (TYZ5) currently trades at 112-15.5 (-1) on decent cumulative volumes of 1.68M. 10Y yield at 4.1483% (+.0096).
- A short-term bear cycle in Treasury futures remains in play. Last Thursday’s sell-off resulted in a print below the 50-day EMA, currently at 112-10+. A clear break of this average would undermine a bull theme and signal scope for a deeper retracement. This would open 111-13+, the Aug 18 low and the next key support. On the upside, initial firm resistance to watch is 113-00, the Sep 24 high.
- Projected rate cut pricing gaining vs. late Monday levels (*): Oct'25 at -24.2bp (-22.7bp), Dec'25 at -44.2bp (-41.3bp), Jan'26 at -53.7bp (-50.7bp), Mar'26 at -64.7bp (-60.9bp).
AUDUSD TECHS: Bullish Outlook
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6660/6707 High Sep 18 / 17
- RES 1: 0.6628/29 High Sep 24/30
- PRICE: 0.6613 @ 16:36 BST Sep 30
- SUP 1: 0.6527/21 61.8% of the Aug 21 - Sep 17 bull leg / Low Sep 26
- SUP 2: 0.6484 76.4% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Note that last week the pair did breach support at the 50-day EMA, at 0.6552. A clear break of this average would signal scope for a deeper retracement and expose 0.6527 once again (pierced), a Fibonacci retracement. For bulls, a stronger reversal higher would refocus attention on 0.6707, Sep 17 high. Initial firm resistance to watch is 0.6628, Sep 24 high.
