EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.60% +0bp
10yr UST 3.97% -1bp
5s-10s UST 36.6 -1bp
WTI Crude 59.9 -1.4
Gold 3955 -26.9
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 890bp -22bp
BRAZIL 6 1/8 03/15/34 228bp +0bp
BRAZIL 7 1/8 05/13/54 318bp -1bp
COLOM 8 11/14/35 311bp +2bp
COLOM 8 3/8 11/07/54 363bp -0bp
ELSALV 7.65 06/15/35 355bp -4bp
MEX 6 7/8 05/13/37 216bp -0bp
MEX 7 3/8 05/13/55 259bp +0bp
CHILE 5.65 01/13/37 124bp +1bp
PANAMA 6.4 02/14/35 217bp -4bp
CSNABZ 5 7/8 04/08/32 651bp -9bp
MRFGBZ 3.95 01/29/31 275bp +3bp
PEMEX 7.69 01/23/50 480bp +4bp
CDEL 6.33 01/13/35 180bp +0bp
SUZANO 3 1/8 01/15/32 167bp -0bp
FX Level Δ DoD
USDBRL 5.36 -0.01
USDCLP 943.36 +2.03
USDMXN 18.4 +0.03
USDCOP 3897.02 +48.17
USDPEN 3.39 +0.01
CDS Level Δ DoD
Mexico 90 1
Brazil 137 0
Colombia 189 1
Chile 50 2
CDX EM 98.41 0.03
CDX EM IG 101.58 0.04
CDX EM HY 94.72 0.04
Main stories recap:
· Major U.S. equity indexes hit all-time highs ahead of important tech earnings reports on Wednesday and Thursday.
· Treasuries rallied slightly in the long end despite a tepid 7-year auction and ahead of tomorrow’s Fed meeting when the FOMC is expected to decide to cut the policy rate by 25bp.
· In the EM primary market, we saw two new mandates announced in Asia while in CEEMEA two new issues were priced, one for a Romanian corporate and a EUR2.25bn 12-year EUR sovereign deal for Slovakia. In LATAM we expect a new issue for Argentina oil and gas E&P company Tecpetrol and a tap of YPF’s 8.75 2031 bonds in the coming days.
· Jamaica sovereign bonds underperformed, falling 2 points, as a category 5 hurricane made landfall today and is anticipated to cause widespread structural failure and more than USD5bn in economic damages.
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Historical bullets
USDCAD TECHS: Breaches The Bull Trigger
- 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: 1.3959 High Sep 25
- PRICE: 1.3939 @ 19:10 BST Sep 26
- SUP 1: 1.3885/3800 Low Sep 25 / 50-day EMA
- SUP 2: 1.3727 Low Aug 29 and a bear trigger
- SUP 3: 1.3689 Low Jul 28
- SUP 4: 1.3637 Low Jul 25
Last week’s rally in USDCAD cancels a recent bearish theme and instead strengthens a bullish outlook. The pair has breached a key resistance at 1.3925, the May 20 high and bull trigger. The breach confirms a resumption of the bull cycle that started Jun 16. This paves the way for a climb towards 1.4019, a Fibonacci retracement point. On the downside, first key support lies at 1.3800, the 50-day EMA.
AUDUSD TECHS: Trades Through The 50-day EMA
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6660/6707 High Sep 18 / 17
- RES 1: 0.6585/6628 20-day EMA / High Sep 24
- PRICE: 0.6547 @ 19:06 BST Sep 26
- SUP 1: 0.6527/21 61.8% of the Aug 21 - Sep 17 bull leg / Low Sep 26
- SUP 2: 0.6484 76.4% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and the latest pullback is considered corrective - for now. However, the pair has breached support at the 50-day EMA, at 0.6551. A clear break of this average signals scope for a deeper retracement and exposes 0.6527 (pierced), a Fibonacci retracement. For bulls, a reversal higher would refocus attention on 0.6707, the Sep 17 high. Initial firm resistance to watch is 0.6628, the Sep 24 high.
EURJPY TECHS: Bulls Remain In The Driver’s Seat
- RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 3: 176.00 Round number resistance
- RES 2: 175.43 High Jul 11 ‘24 and a key medium-term resistance
- RES 1: 175.05 High Sep 26
- PRICE: 174.95 @ 19:02 BST Sep 26
- SUP 1: 173.53/172.24 20- and 50-day EMA
- SUP 2: 170.97 Low Aug 14
- SUP 3: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
- SUP 4: 168.46 Low Jul 1
The trend set-up in EURJPY is unchanged, it remains bullish and the cross traded to a fresh cycle high last week. This confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull-mode too, highlighting a dominant uptrend. Sights are on 175.43, the Jul 11 ‘24 high and a key M/T resistance. On the downside, first support to watch lies at 173.53, the 20-day EMA.
