EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 4.12% +13bp
10yr UST 4.51% +12bp
5s-10s UST 38.3 -1bp
WTI Crude 64.6 +1.3
Gold 3313 -40.0
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 885bp -11bp
BRAZIL 6 1/8 03/15/34 257bp -7bp
BRAZIL 7 1/8 05/13/54 357bp -5bp
COLOM 8 11/14/35 410bp +6bp
COLOM 8 3/8 11/07/54 499bp +5bp
ELSALV 7.65 06/15/35 428bp -8bp
MEX 6 7/8 05/13/37 264bp -5bp
MEX 7 3/8 05/13/55 328bp -5bp
CHILE 5.65 01/13/37 144bp -5bp
PANAMA 6.4 02/14/35 322bp -6bp
CSNABZ 5 7/8 04/08/32 573bp -28bp
MRFGBZ 3.95 01/29/31 272bp -10bp
PEMEX 7.69 01/23/50 636bp -6bp
CDEL 6.33 01/13/35 205bp -6bp
SUZANO 3 1/8 01/15/32 187bp -12bp
FX Level Δ DoD
USDBRL 5.57 -0.02
USDCLP 934.88 +4.02
USDMXN 19.1 -0.05
USDCOP 4116.44 +7.75
USDPEN 3.65 +0.02
CDS Level Δ DoD
Mexico 114 (2)
Brazil 158 (4)
Colombia 234 6
Chile 56 (2)
CDX EM 97.17 0.15
CDX EM IG 101.10 0.08
CDX EM HY 93.08 0.14
Main stories recap:
Comments
· U.S. stock indexes rallied while Treasury yields climbed 9-13 bps across the curve. The U.S. monthly labor report wasn’t as weak as feared and average hourly earnings increased more than expected.
· The EM secondary market was mixed across the globe with Asia benchmark USD bond spreads tightening up to 3bps while CEEMEA spreads moved in a +10/-10 bps range.
· LATAM spreads tightened significantly with small changes in bond prices outperforming the big sell-off in US Treasuries.
· Colombia bonds underperformed, falling more than a point, as anxiety rose ahead of a June budget plan update expected for next week and local reports that the government might propose an ‘escape clause” that would allow them to temporarily skirt the fiscal rule.
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Historical bullets
STIR: Tiny Net Moves On FOMC and Powell
- Powell consistently talking on the need for patience and greater clarity before moving rates (we count “wait” 25 times in a rough transcript) has reversed the initially modest dovish reaction to the FOMC announcement.
- Politics clouds the moves though. As we noted earlier the initial rally also seemed to be boosted by Trump headlines shortly beforehand on being unwilling to lower tariffs on China in order to get it to the table landing. On the other hand, Bloomberg reporting just now that the Trump administration plans to rescind Biden-era AI chip curbs has marginally helped pare gains.
- It leaves a Fed Funds rate path back broadly unchanged for 2025 meetings from pre-FOMC levels.
- Cumulative cuts from an assumed 4.33% effective: 6bp Jun, 22bp Jul, 43bp Sep, 60.5bp Oct and 79bp Dec.
- SOFR futures implied yields are holding some small declines further out the curve, with SFRZ6 2bps lower post-FOMC (for -1.5bp on the day). This sees the terminal yield of 3.105% having technically ticked over from U6 earlier today.
US TSYS: BLOCK: Large Jun'25 5Y Sale
- -21,000 FVM5 108-19.25, sale through 108-20.5 post time bid at 1533:16ET, DV01 $900,000.
US STOCKS: Late Rally: Trump Rescinds Global Chips Curb
Stocks rebound off lower levels following headline that Pres Trump rescinds global chips curb:
- DJIA up 391.52 points (0.96%) at 41226.44
- S&P E-Mini Future up 40.25 points (0.72%) at 5668.5
- Nasdaq up 104.6 points (0.6%) at 17801.08
