EM LATAM CREDIT: LATAM Credit Market Wrap

The July Beige Book's description of inflation suggested relatively steady price pressures compared with the June report, though it seems that what were previously "plans" to pass through tariff-related costs to customers have begun to materialize. 

• In probably the most important finding for the FOMC, the biggest price increases are yet to come: "Contacts in a wide range of industries expected cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer."
• District-by-district, 4 Feds reported selling prices increased "modestly" (Boston, Philadelphia, Cleveland, San Francisco), 6 "moderately" (New York, Richmond, Atlanta, Chicago, St Louis, Kansas City), one "eased" (Minneapolis) and one "steady" (Dallas).
• The table below summarizes the recent evolution of the Beige Book's inflation characterization. (Our characterization is derived from the individual Fed reports, not the overall summary.)
• From the July report: "Prices increased across Districts, with seven characterizing price growth as moderate and five characterizing it as modest, mostly similar to the previous report. In all twelve Districts, businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction. Rising insurance costs represented another widespread source of pricing pressure. Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges, although some held off raising prices because of customers' growing price sensitivity, resulting in compressed profit margins. Contacts in a wide range of industries expected cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer."

• RES 4: 0.8800 Round number resistance 
• RES 3: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
• RES 2: 0.8738 High Apr 11 high and a key resistance
• RES 1: 0.8697/98 High Jul 15/16
• PRICE: 0.8661 @ 17:03 BST Jul 16
• SUP 1: 0.8630 Low Jul 14
• SUP 2: 0.8599 20- day EMA
• SUP 3: 0.8537 50-day EMA
• SUP 4: 0.8508 Low Jun 27

A bullish condition in EURGBP remains intact and the cross is trading closer to its recent highs. Fresh cycle highs this week maintain the price sequence of higher highs and higher lows and note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Scope is seen for a climb towards key resistance at 0.8738, the Apr 11 high. Support to watch lies at 0.8599, the 20-day EMA.

• Date $MM Issuer (Priced *, Launch #)
• 07/16 $4B #JP Morgan 11NC10 +112.5
• 07/16 $2.75B #Citigroup PerpNC5 6.875%
• 07/16 $2.2B #Indonesia Sukuk $1.1B 5Y 4.55%, $1.1B 10Y 5.2%
• 07/16 $2.2B #Kioxia Holdings $1.1B 5NC2 6.25%, $1.1B 8NC3 6.625%
• 07/16 $500M #Golub Capital Private Cr 3Y +183