EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.82% -2bp
10yr UST 4.31% -3bp
5s-10s UST 48.1 -0bp
WTI Crude 62.5 -0.9
Gold 3316 -16.6
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 911bp -0bp
BRAZIL 6 1/8 03/15/34 239bp +7bp
BRAZIL 7 1/8 05/13/54 326bp +4bp
COLOM 8 11/14/35 355bp +1bp
COLOM 8 3/8 11/07/54 428bp +3bp
ELSALV 7.65 06/15/35 411bp -2bp
MEX 6 7/8 05/13/37 237bp +1bp
MEX 7 3/8 05/13/55 289bp +2bp
CHILE 5.65 01/13/37 132bp +2bp
PANAMA 6.4 02/14/35 237bp -9bp
CSNABZ 5 7/8 04/08/32 549bp +10bp
MRFGBZ 3.95 01/29/31 258bp -6bp
PEMEX 7.69 01/23/50 517bp +1bp
CDEL 6.33 01/13/35 189bp +2bp
SUZANO 3 1/8 01/15/32 162bp +3bp
FX Level Δ DoD
USDBRL 5.50 +0.07
USDCLP 963.57 -0.36
USDMXN 18.8 +0.04
USDCOP 4034.00 +3.81
USDPEN 3.53 -0.01
CDS Level Δ DoD
Mexico 98 0
Brazil 141 3
Colombia 193 0
Chile 51 (0)
CDX EM 98.03 (0.03)
CDX EM IG 101.42 (0.01)
CDX EM HY 94.62 (0.04)
Main stories recap:
· Tech correction triggered a rally in U.S. Treasuries of 1-3bp while the market awaited Fed Chair Powell’s Jackson Hole speech on Friday as well as further news on Russia/Ukraine peace prospects.
· EM Asia benchmark bond spread changes were quoted -1/+1bp while in CEEMEA and LATAM spreads trended about 1-3bp wider for low beta names and about 10bp wider in higher beta.
· Panama sovereign bond spreads continued to tighten as follow through from last week when the finance minister detailed plans to reduce debt and maintain investment grade ratings.
· Select Brazil corporate bonds like Raizen, Braskem and CSN underperformed, widening about 10bp.
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Historical bullets
JGB TECHS: (U5) Returns Toward 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: 138.08 @ 16:31 GMT Jul 18
- SUP 1: 137.70 - Low Jul 16
- 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 hold above recent lows, however a bearish theme remains intact following the reversal posted off the mid-June highs. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, 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.
CANADA: July BOC Cut Pricing: From Distinct Possibility To Negligible This Week
The implied probability of a July BOC rate cut has gone from a distinct possibility to negligible this week, following Tuesday's firmer-than-expected core inflation data.
- The accompanying chart shows implied pricing (in percentage points) for July's BOC decision - it dropped from around 30% implied (7+bp) prior to the labour market report last Friday, to under 20% going into CPI (4+bp), reducing after that to under 10% (<2bp).
- For the year as a whole, markets have priced out about 15bp of cuts through those two data points - now seeing about 15bp of easing through December. As such, it's very much in question whether the BOC's easing cycle is already at an end.
- Apart from the ongoing US-Canada trade negotiations, next week's scheduled highlight will be the BOC's Business Outlook Survey out Monday, followed by May Retail Sales out Thursday which will be the final major input into the macro puzzle for the BOC going into its decision on July 30.
| Meeting | Current | Last week's close (Jul 09) | Change since then | Cumulative Change From Current Rate (bp) |
| Jul 30 2025 | 2.74 | 2.68 | 5.6 | -1.9 |
| Sep 17 2025 | 2.69 | 2.60 | 9.3 | -6.0 |
| Oct 29 2025 | 2.65 | 2.53 | 12.1 | -10.5 |
| Dec 10 2025 | 2.61 | 2.45 | 15.7 | -14.6 |
USDCAD TECHS: Has Pierced The 50-Day EMA
- RES 4: 1.3920 High May 21
- RES 3: 1.3862 High May 29
- RES 2: 1.3798 High Jun 23
- RES 1: 1.3747/74 50-day EMA / High Jul 17
- PRICE: 1.3715 @ 16:56 BST Jul 18
- SUP 1: 1.3639/3557 Low Jul 08 / 03
- SUP 2: 1.3540 Low Jun 16 and the bear trigger
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
USDCAD is trading closer to its recent highs. Attention is on resistance at 1.3747, the 50-day EMA. It has been pierced. A clear break of it is required to highlight a possible stronger short-term reversal. This would open 1.3798, the Jun 23 high. For now, a bear trend remains firmly in place. A resumption of weakness would refocus attention on key support at 1.3540, the Jun 16 low. Clearance of this level would confirm a resumption of the downtrend.
