EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.59% +4bp
10yr UST 4.01% +3bp
5s-10s UST 41.5 -1bp
WTI Crude 57.5 +0.1
Gold 4252 -74.8
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 1332bp +80bp
BRAZIL 6 1/8 03/15/34 231bp -3bp
BRAZIL 7 1/8 05/13/54 320bp -1bp
COLOM 8 11/14/35 330bp -7bp
COLOM 8 3/8 11/07/54 386bp -6bp
ELSALV 7.65 06/15/35 388bp -4bp
MEX 6 7/8 05/13/37 225bp -1bp
MEX 7 3/8 05/13/55 271bp -1bp
CHILE 5.65 01/13/37 129bp -3bp
PANAMA 6.4 02/14/35 242bp -6bp
CSNABZ 5 7/8 04/08/32 617bp +3bp
MRFGBZ 3.95 01/29/31 270bp -1bp
PEMEX 7.69 01/23/50 496bp +0bp
CDEL 6.33 01/13/35 193bp -2bp
SUZANO 3 1/8 01/15/32 178bp -6bp
FX Level Δ DoD
USDBRL 5.41 -0.03
USDCLP 957.65 +1.70
USDMXN 18.4 -0.07
USDCOP 3831.20 -18.96
USDPEN 3.38 -0.01
CDS Level Δ DoD
Mexico 97 2
Brazil 147 2
Colombia 203 (1)
Chile 55 1
CDX EM 97.55 0.05
CDX EM IG 101.23 0.01
CDX EM HY 93.14 0.02
Main stories recap:
· Treasury yields rose about 4bp as U.S. regional bank stocks bounced back which was supportive for major U.S. equity indexes.
· LATAM benchmark bond spreads were generally 3-7bp tighter though there were exceptions.
· Argentina sovereign bonds slipped 1.5 pt as the market did not greet the idea of collateral backed private-sector loans warmly and has become less reactive to U.S. expressions of support.
· Telefonica Moviles Chile bonds moved 2 points higher as we awaited more news about a potential joint purchase of the struggling company from Spain based Telefonica by Mexico based America Movil and Chile’s Entel.
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ASIA: Coming Up In Asia Pac Markets On Thursday
| 2345BST | 0645HKT | 0845AEST | New Zealand Q2 GDP |
| 0050BST | 0750HKT | 0950AEST | Japan July Core Machine Orders |
| 0200BST | 0900HKT | 1100AEST | China Aug Swift Global Payments In CNY |
| 0230BST | 0930HKT | 1130AEST | Australia Aug Jobs Report |
| 0335BST | 1035HKT | 1235AEST | New Zealand 2030, 2024 Bond Sale |
| 0430BST | 1130HKT | 1330AEST | Japan 3mth Bill Sale |
| 0600BST | 1300HKT | 1500AEST | Japan Aug Tokyo Condominiums For Sale |
Source: Bloomberg Finance L.P./MNI
FED: MNI Fed Review-Sept 2025: No Risk-Free Paths Now
We've published our review of the September FOMC meeting - Download Full Report Here
- The Fed resumed its easing cycle with the first cut of the year on September 17, of 25bp to a range of 4.00-4.25%. That decision was expected, but the lack of conviction on the FOMC about the rate path forward was a key theme of the September meeting’s release materials, as well as Chair Powell’s press conference.
- Despite a lower rate path signaled in the new Dot Plot, a seeming lack of clarity on delivering those future rate cuts saw an early dovish market reaction subsequently reverse.
- See PDF report for:
- MNI View
- Market Reaction
- MNI Instant Answers
- Press Conference Transcript
- FOMC Meeting Links
- Policy Statement Changes
- Dot Plot/Econ Projections
FED: Monthly Data In Sharper Focus Ahead Of October's Meeting (3/3)
On inflation, Powell said “since April, to me, the risks of higher and more persistent inflation have probably become a little less… We continue to expect it to move up, maybe not as high as we would have expected it to move up a few months ago. The passthrough of the tariffs into inflation has been slower and smaller. The labor market has softened. So the case for there being a persistent inflation outbreak is less.”
- On whether the Fed would have cut earlier in the year had they known payrolls would be substantially revised lower: “We have to live life looking through the windshield rather than the rear view mirror, as you know, and all I can tell you is we see where we are now and we take appropriate action. And we took that appropriate action today.”
- All of that sets up what, as Powell said, would be a meeting-by-meeting approach. It’s possible we could get more sensitivity to individual releases, as there aren’t many major ones ahead of the next decision at end-October (one CPI, one nonfarm payrolls). A stronger-than-expected employment report in particular could see conviction on an end-October cut dissipate quickly. As such the 85+% priced 25bp cut at that juncture may be on the high side depending on one’s forecasts for the monthly data.
