LATIN AMERICA: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.96% -3bp
10yr UST 4.38% -1bp
5s-10s UST 41.6 +2bp
WTI Crude 74.9 -0.2
Gold 3365 -5.6
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 927bp +2bp
BRAZIL 6 1/8 03/15/34 260bp -0bp
BRAZIL 7 1/8 05/13/54 361bp +2bp
COLOM 8 11/14/35 419bp -17bp
COLOM 8 3/8 11/07/54 496bp -3bp
ELSALV 7.65 06/15/35 446bp +2bp
MEX 6 7/8 05/13/37 259bp +3bp
MEX 7 3/8 05/13/55 321bp +2bp
CHILE 5.65 01/13/37 149bp -1bp
PANAMA 6.4 02/14/35 308bp +3bp
CSNABZ 5 7/8 04/08/32 580bp +9bp
MRFGBZ 3.95 01/29/31 278bp +3bp
PEMEX 7.69 01/23/50 639bp -0bp
CDEL 6.33 01/13/35 209bp -2bp
SUZANO 3 1/8 01/15/32 185bp -5bp
FX Level Δ DoD
USDBRL 5.52 +0.03
USDCLP 942.88 +2.48
USDMXN 19.2 +0.13
USDCOP 4095.45 +10.53
USDPEN 3.60 +0.01
CDS Level Δ DoD
Mexico 108 (1)
Brazil 157 (2)
Colombia 226 (0)
Chile 56 (0)
CDX EM 96.99 0.02
CDX EM IG 101.01 (0.02)
CDX EM HY 92.98 (0.01)
Main stories recap:
Comments
· Mixed close in equity indexes with verdict of whether U.S. will enter the Iran-Israel fray still hovering while tariff tensions still seem heightened as Japan cancelled a high-level meeting in reaction to U.S. demands on defense spending.
· U.S. Treasuries rallied a few bp in the front end with mixed signals coming from a few Fed governors about the next policy move. The Philly Fed business outlook was reported weaker than consensus.
· EM was quiet on the primary market front while in the EM Asia and CEEMEA secondary markets benchmark bond spreads showed a widening bias.
· LATAM secondary market spreads generally widened 2-3bp. Colombia sovereign bonds outperformed, possibly due to Fitch deciding not downgrade ratings in the near term.
· Raizen bonds tightened 7-12bp, bouncing back from a brief sell-off in past days after Fitch moved ratings to negative outlook recently, but people still expected asset sale announcements in the coming weeks.
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Historical bullets
USDCAD TECHS: Moving Average Studies Highlight A Downtrend
- RES 4: 1.4296 High Apr 7
- RES 3: 1.4200 Round number resistance
- RES 2: 1.4111 High Apr 4
- RES 1: 1.4016/17 High May 12 / 13 / 50-day EMA
- PRICE: 1.3827 @ 16:28 BST May 21
- SUP 1: 1.3814/3751 Low May 8 / 6 and the bear trigger
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 ‘24
- SUP 4: 1.3643 Low Oct 9 ‘24
The trend condition in USDCAD remains bearish and recent gains appear corrective. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. A resumption of the trend would open 1.3744, a Fibonacci retracement. Key resistance to watch is 1.4017, the 50-day EMA. A clear break of this hurdle would signal a stronger reversal and open 1.4111, the Apr 4 high.
US TSYS: Massive Deficit Estimates Tied to Tax/Spending Bill Weighing on Bonds
- Treasuries look to finish near late Wednesday session lows, curves bear steepening: 2s10s +6.792 at 58.019 - highest level since May 1. Heavier volumes tied to Jun/Sep Tsy futures rolls, 5s well over 1M.
- No economic data, headline or outright flow to site for the move other than trepidation over Pres Trump's tax & spending bill estimated to increase the deficit appr $3.3 trillion over 10 years. Lawmakers continued to debate the bill and passage remained uncertain despite Pre Trump personally haranguing GOP holdouts.
- Treasury futures extend session lows after the $16B 20Y Bond auction (912810UL0) tailed, drawing a high yield of 5.047% vs 5.035% When-Issued yield at the cutoff; 2.46x bid-to-cover vs. 2.63x prior. Bonds yield climbed to 5.0955% intraday high - last seen late October 2023. 10Y yield up to 4.5825% (+.0956).
- The Jun'25 10Y futures contract slipped to 109-13.5 low (-25) briefly -- through initial technical support at 109-18.5 (May 15 low) before bouncing to 109-19 - strengthening a bearish theme and exposing key support at 109-08, Apr 24 low and a bear trigger.
- Cross asset update: Gold up 33.4 at 3323.42, stocks weaker with rise in bond yield (SPX emini -95.0 to 5864.75), Crude retreating (WTI -0.62 at 61.41).
- Look ahead to Thursday's data: Weekly Claims at 0830ET, Flash PMIs at 0945ET, Exist Home Sales at 1000ET and KC Fed Mfg Activity at 1100ET.
LOOK AHEAD: Thursday Data Calendar: Weekly Claims, Flash PMIs, Exist Home Sales
- US Data/Speaker Calendar (prior, estimate)
- 22-May 0800 Richmond Fed Barkin fireside chat (no text, Q&A)
- 22-May 0830 Initial Jobless Claims (229k, 230k)
- 22-May 0830 Continuing Claims (1.881M, 1.883M)
- 22-May 0830 Chicago Fed Nat Activity Index (-.03, -0.25)
- 22-May 0945 S&P Global US Manufacturing PMI (50.2, 49.9)
- 22-May 0945 S&P Global US Services PMI (50.8, 51.0)
- 22-May 0945 S&P Global US Composite PMI (50.6, 50.3)
- 22-May 1000 Existing Home Sales (4.02M, 4.10M), MoM (-5.9%, 2.0%)
- 22-May 1100 Kansas City Fed Manf. Activity (-4, -5)
- 22-May 1130 US Tsy $85B 4W & $75B 8W bill auctions
- 22-May 1300 US Tsy $18B 10Y TIPS auction
- 22-May 1400 NY Fed Williams keynote remarks NY Fed event (text, Q&A)
