EM LATAM CREDIT: LATAM Credit Market Wrap
Source: Bloomberg Finance L.P.
Measure Level Δ DoD
5yr UST 3.71% +4bp
10yr UST 4.14% +4bp
5s-10s UST 42.2 -0bp
WTI Crude 60.2 +0.5
Gold 4209 +1.7
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 802bp N/A
BRAZIL 6 1/8 03/15/34 232bp +6bp
BRAZIL 7 1/8 05/13/54 317bp +5bp
COLOM 8 11/14/35 324bp +0bp
COLOM 8 3/8 11/07/54 376bp -0bp
ELSALV 7.65 06/15/35 352bp -5bp
MEX 6 7/8 05/13/37 217bp -2bp
MEX 7 3/8 05/13/55 263bp -2bp
CHILE 5.65 01/13/37 114bp -2bp
PANAMA 6.4 02/14/35 197bp -2bp
CSNABZ 5 7/8 04/08/32 701bp -4bp
MRFGBZ 3.95 01/29/31 247bp -18bp
PEMEX 7.69 01/23/50 473bp +3bp
CDEL 6.33 01/13/35 174bp -3bp
SUZANO 3 1/8 01/15/32 166bp -3bp
FX Level Δ DoD
USDBRL 5.46 +0.15
USDCLP 923.11 +4.93
USDMXN 18.2 -0.06
USDCOP 3842.39 +43.48
USDPEN 3.36 +0.00
CDS Level Δ DoD
Mexico 94 1
Brazil 143 7
Colombia 205 2
Chile 46 (0)
CDX EM 98.60 0.00
CDX EM IG 101.50 0.02
CDX EM HY 95.33 0.06
Main stories recap:
· Treasury yields climbed 4bp, repeating yesterday’s performance, as today’s U.S. economic reports showed continued firmness as well as limited progress on inflation which when combined with yesterday’s improved labor market data indicated less urgency for the Federal Reserve to cut rates more aggressively next year.
· LATAM secondary market benchmark USD bond spreads tightened 2-4bp.
· Argentina sovereign bonds outperformed, up about ½ pt, after news that the government would attempt an international auction of USD local law bonds to refinance upcoming debt maturities.
· Brazil sovereign bonds widened 5-6bp as ex-President Jair Bolsonaro reportedly endorsed his eldest son for the 2026 presidential election instead of the market’s preferred candidate Sao Paolo governor Tarcisio de Freitas which made it seem less likely that President Lula would be defeated for re-election.
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Historical bullets
EURGBP TECHS: Bullish Trend Sequence
- RES 4: 0.8865 1.764 proj of the Sep 15 - 25 - Oct 8 price swing
- RES 3: 0.8848 1.618 proj of the Sep 15 - 25 - Oct 8 price swing
- RES 2: 0.8835 High May 3 2023
- RES 1: 0.8830 Intraday high
- PRICE: 0.8819 @ 15:58 GMT Nov 5
- SUP 1: 0.8763 Low Nov 3
- SUP 2: 0.8741 20-day EMA
- SUP 3: 0.8707 50-day EMA
- SUP 4: 0.8656 Low Oct 8 and a key support
A bull cycle in EURGBP remains intact. The break last week of resistance at 0.8769, the Jul 28 high and a bull trigger, confirms a resumption of the uptrend and this week's fresh cycle high reinforces current conditions. Sights are on 0.8835, the May 3 2023 high. Initial support lies at 0.8763, the Nov 3 low. Note that the trend is overbought, a pullback would be considered corrective.
PIPELINE: Corporate Bond Update: Over $9.5B Debt to Issue Wednesday
- $9.65B to price Wednesday, $56.05B/wk
- Date $MM Issuer (Priced *, Launch #)
- 11/05 $1.7B #Transcontinental Gas Pipeline $1B 10Y +95, $700M 30Y +105
- 11/05 $1.25B #Intercontinental Exchange $600M 3Y +45, $650M +5Y +60
- 11/05 $1.25B #Equinix 5Y +85
- 11/05 $1B #Santos Finance 10Y +168
- 11/05 $850M #AviLease Capital 5Y +110
- 11/05 $750M #Apollo Global Mgt $400M 5Y +85, $350M 8/35 Tap +110
- 11/05 $750M #CBRE Services 7Y +98
- 11/05 $600M #Mattel 5Y +130
- 11/05 $500M #Polaris +5Y +185
- 11/05 $1B *KEPCO $600M 3Y SOFR+62, $400M 5Y +47
GBPUSD TECHS: Bear Leg Extension
- RES 4: 1.3471 High Oct 17 and a key short-term resistance
- RES 3: 1.3369 50-day EMA
- RES 2: 1.3249/3277 Low Oct 14 / 20-day EMA
- RES 1: 1.3142 Low Aug 1
- PRICE: 1.3041 @ 15:57 GMT Nov 5
- SUP 1: 1.3010 Low Nov 4
- SUP 2: 1.2971 1.382 proj of the Sep 17 - 25 - Oct 1 price swing
- SUP 3: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull leg
- SUP 4: 1.2877 1.618 proj of the Sep 17 - 25 - Oct 1 price swing
A sharp sell-off in GBPUSD Tuesday reinforces bearish conditions. A key support at 1.3142, the Aug 1 low, has recently been cleared. The break confirmed a resumption of the downtrend that started Sep 17. Sights are on 1.2971 next, a Fibonacci projection point. Note that the trend is in oversold territory, a recovery would allow this condition to unwind. Initial resistance is at 1.3142, the Aug 1 low.
