EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.59% -1bp
10yr UST 4.04% -0bp
5s-10s UST 44.2 +1bp
WTI Crude 64.5 +1.2
Gold 3689 + 9.6
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 1379bp -79bp
BRAZIL 6 1/8 03/15/34 231bp -1bp
BRAZIL 7 1/8 05/13/54 322bp -2bp
COLOM 8 11/14/35 330bp +8bp
COLOM 8 3/8 11/07/54 385bp +7bp
ELSALV 7.65 06/15/35 393bp -0bp
MEX 6 7/8 05/13/37 235bp -1bp
MEX 7 3/8 05/13/55 289bp -3bp
CHILE 5.65 01/13/37 135bp +1bp
PANAMA 6.4 02/14/35 234bp -7bp
CSNABZ 5 7/8 04/08/32 570bp -2bp
MRFGBZ 3.95 01/29/31 235bp +1bp
PEMEX 7.69 01/23/50 456bp -3bp
CDEL 6.33 01/13/35 187bp -3bp
SUZANO 3 1/8 01/15/32 168bp +0bp
FX Level Δ DoD
USDBRL 5.30 -0.02
USDCLP 947.83 -3.61
USDMXN 18.3 -0.08
USDCOP 3870.25 -35.79
USDPEN 3.48 -0.01
CDS Level Δ DoD
Mexico 87 (0)
Brazil 129 (2)
Colombia 171 4
Chile 46 1
CDX EM 98.36 0.03
CDX EM IG 101.69 0.01
CDX EM HY 94.88 0.08
Main stories recap:
· U.S. Treasury yields fell 1-2bp despite stronger than expected U.S. retail sales data and an upwardly revised 3Q GDP estimate from Atlanta Fed GDP Now to 3.4%.
· The EM primary market was active with four new deals issued out of CEEMEA.
· In LATAM today we saw Mexico raise an impressive USD8bn in a three-tranche deal following yesterday’s EUR5bn (USD5.9bn) triple tranche issuance. The total of nearly USD14bn will fund a capital infusion to Pemex set aside in the Mexico 2026 budget to enable the company to pay 2026 debt maturities.
· Colombia sovereign bonds widened about 9bp today as the U.S. decertified the country as an ally in the drug war as part of a required annual review of international cooperation in fighting drug interdiction into the U.S.
· Argentina bonds rebounded by nearly 2 points as President Milei presented a 2026 budget that lowered the primary budget surplus target to enable higher spending to appease voters and provincial leaders.
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Historical bullets
AUSSIE 10-YEAR TECHS: (U5) Follows Fade in Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 15:17 BST Aug 15
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed both the recent poor NFP print as well as Tuesday’s inflation number. While this impact faded into the close of the week, 10-year futures remain toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
FOREX: USD Index Pinned to 50-dma as Putin Shakes Hands with Trump
- USD slipped against all others Friday, with a poor set of retail sales and Uni of Michigan sentiment numbers meeting a higher-than-expected import price index to further stimulate concerns over a stagflarionary phase in the US economy. The USD Index trades either side of the 50-dma which, notably, has begun to flatten out after maintaining a solid downtrend throughout 2025.
- JPY is the strongest currency in G10, extending the breakout and bearish conclusion of the consolidation phase in USD/JPY. Recent weakness puts the price through support drawn off the early August lows as well as 146.71, a key retracement. Price action this week marks a full reversal of the previously overbought condition, keeping the downside argument in focus.
- Anticipation ahead of the Putin-Trump meeting has reached fever pitch. Footage showing the Presidents shaking hands in Alaska has helped ease concerns over a hostile meeting, but it's the outcomes that will matter to markets - particularly as equities hold at alltime highs. Any signs of progress toward a ceasefire would be warmly received by risk sentiment - although both Trump and Putin cautioned against a optimistic outcome in comments to press.
- We noted earlier in the week the pressure building on USD/HKD, with price action not matching the pattern of HKMA intervention. That move extended overnight, and is still building at typing, putting spot down to new pullback lows of 7.8119 shortly after the European open. Overnight swap rates have surged further still Friday (hitting 1.7% at typing), well ahead of the 0.3% prevailing rate mid-week and should continue to support a recovery in HIBOR fixes ahead. Today's 1m HIBOR fixed higher by 41bps, hitting 1.45% for the highest fix since mid-May. It's these factors that should work against the HKD carry trade (selling HKD, buying USD), evident in the further tightening of the HKD forward discount today: down 975 points from as high as 1270 this month.
- Focus in the coming week shifts to Jackson Hole and Powell's comments on Friday. With the September meeting still in flux - any conviction toward tipping the board toward a rate cut at the next FOMC will be carefully watched, but it's a hawkish outturn that could be more consequential for markets, as OIS prices a near 90% chance of easing on September 17th.
MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
- MNI: US TSY TICS NET FLOWS IN JUN +$77.8B
- US TSY TICS NET L-T FLOWS IN JUN +$150.8B
