EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.77% +1bp
10yr UST 4.18% +1bp
5s-10s UST 41.3 +0bp
WTI Crude 65.5 +0.5
Gold 3771 +21.2
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 1307bp +84bp
BRAZIL 6 1/8 03/15/34 220bp +1bp
BRAZIL 7 1/8 05/13/54 310bp -1bp
COLOM 8 11/14/35 322bp +4bp
COLOM 8 3/8 11/07/54 388bp +4bp
ELSALV 7.65 06/15/35 370bp -2bp
MEX 6 7/8 05/13/37 217bp -1bp
MEX 7 3/8 05/13/55 270bp -2bp
CHILE 5.65 01/13/37 128bp -1bp
PANAMA 6.4 02/14/35 222bp -1bp
CSNABZ 5 7/8 04/08/32 525bp +32bp
MRFGBZ 3.95 01/29/31 223bp +0bp
PEMEX 7.69 01/23/50 463bp -1bp
CDEL 6.33 01/13/35 166bp -2bp
SUZANO 3 1/8 01/15/32 154bp +0bp
FX Level Δ DoD
USDBRL 5.34 -0.02
USDCLP 960.00 -1.22
USDMXN 18.4 -0.10
USDCOP 3901.66 -3.86
USDPEN 3.49 -0.01
CDS Level Δ DoD
Mexico 93 (0)
Brazil 138 1
Colombia 190 2
Chile 51 0
CDX EM 97.77 0.01
CDX EM IG 101.65 0.00
CDX EM HY 95.02 (0.00)
Main stories recap:
· Treasuries were mostly unchanged and U.S. equity indexes traded up as a relief trade with consensus prints for U.S. economic data including the Fed’s preferred inflation gauge Core PCE that registered a .2% MoM gain.
· EM secondary benchmark bond spread changes were mixed and quoted in a -2/+4 range, though Brazil corporate bonds were a bit weaker, possibly in a sympathetic reaction to the Braskem news.
· Brazil chemical company Braskem hired financial and legal advisors to optimize their capital structure which we took to mean a debt restructuring given debt leverage of 10.98x as of 2Q2025 and apparently so did the market as bonds were down about 10 points across most of the curve.
· We also saw profit taking in Argentina sovereign bonds as benchmark 35s fell 2 points to leave them 9 points higher for the week.
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Historical bullets
US TSYS: US Tsys Tracked German Bund, French Oat Earlier, Extend Late Highs
- Tsys reversed early weakness - extended highs in 2s-10s - following German Bund and French Oat contracts. Sources posited real$ bought the early dip in OATS squeezing shorts with Bunds then Tsys reacting in short order on decent volumes.
- Dec'25 10Y contract tapped 112-15, just below technical resistance at 112-15+, the Aug 5 high and the bull trigger. Clearance of this hurdle would resume the uptrend and pave the way for a climb towards 112-19 initially, a Fibonacci projection.
- Tsy curves twist steeper: 2s10s +3.484 at 61.533 (nearing mid-April's 3Y highs), 5s30s +3.160 at 120.597.
- No reaction to MBA composite mortgage applications dip -0.5% (sa) last week after -1.4% the week prior as they still holds onto most of its refi-driven 11% increase before that. New purchase applications increased 2.2%, their largest increase in a month, whilst refi applications fell another -3.5% after -3.1% following the 23% jump before that.
- NY Fed President Williams (permanent FOMC voter) on CNBC doesn't sound particularly concerned about the state of the labor market, in particular downplaying the weak nonfarm payrolls growth implied by the July employment report's downward revisions.
- Uncertainty over an independent Federal Reserve aside (following Trump's "firing" of Fed Gov Cook late Monday) Trump seeking a majority of like minded Fed boardmen in the aftermath of Chairman Powell's dovish Jackson Hole speech appears to be emboldening risk takers as SPX emini and Nasdaq indexes made new highs (6502.50 and 21616.18 respectively)
- Look ahead to Thursday's session: Weekly Claims, GDP, PCE and US Tsy $44B 7Y Auction.
USDCAD TECHS: Bullish Trend Structure
- RES 4: 1.4111 High Apr 10
- RES 3: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.3968 High May 20
- RES 1: 1.3925 High Aug 22
- PRICE: 1.3826 @ 16:10 BST Aug 27
- SUP 1: 1.3807 20-day EMA
- SUP 2: 1.3777/22 50-day EMA / Low Aug 7
- SUP 3: 1.3576 Low Jul 23
- SUP 4: 1.3557/40 Low Jul 3 / Low Jun 16 and the bear trigger
A bull cycle in USDCAD that started mid-June remains in play, despite Wednesday’s fade into the close. The recent breach of resistance at 1.3879, the Aug 1 high, continues to highlight a bullish phase. Moving average studies have recently crossed and are in a bull-mode position, strengthening the current uptrend. An extension higher would signal scope for 1.4019, a Fibonacci retracement. Support to watch lies at 1.3775, the 50-day EMA. A break of the EMA would signal a reversal.
AUDUSD TECHS: Holding On To Its Latest Gains
- RES 4: 0.6688 High Nov 7 ‘24
- RES 3: 0.6677 0.764 proj of the Jun 23 - Jul 11 - 17 price swing
- RES 2: 0.6569/6625 High Aug 14 / 24 and the bull trigger
- RES 1: 0.6524 High Aug 18
- PRICE: 0.6487 @ 16:01 BST Aug 27
- SUP 1: 0.6415 Low Aug 21 / 22
- SUP 2: 0.6373 Low Jun 23
- SUP 3: 0.6354 38.2% retracement of the Apr 9 - Jul 24 upleg
- SUP 4: 0.6323 Low Apr 16
AUDUSD is holding on to its latest gains following the recovery from last week’s low. The rally signals the end of the recent corrective phase, backed up by Wednesday’s sharp bounce off the daily low. A continuation higher here would signal scope for a climb towards 0.6569, the Aug 14 high. Key resistance and the bull trigger is at 0.6625, the Aug 24 high. On the downside, support to watch lies at 0.6415, the Aug 21 / 22 low. A clear break of it would resume the bear leg.
