EM LATAM CREDIT: Mercosur EU Trade Deal: Positive
"Brazil’s Lula Calls on Macron to Agree to Mercosur Trade Deal" - BBG
The trading bloc of Brazil, Argentina, Uruguay and Paraguay have a deal in principal with the European Union but France objects to the terms.
Incoming president of the Mercosur, President Lula of Brazil, is applying pressure to finalize the agreement. It would be beneficial to the Latin American countries as it would expand their export markets.
Argentina is supportive of expanding the country's presence globally though President Milei has said he was willing to sacrifice membership in Mercosur if needed in order to get a U.S. Trade deal that it is seeking.
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GILTS: Early Range In Futures Intact, Curve Twist Steepens
There was also a muted reaction in gilts to the latest round of EU-U.S. trade headlines, although fresh weakness in U.S. e-mini futures seems to lend some background support to gilts. Futures remain in the range establish in the first 30 minutes of trade.
- Initial support and resistance of note at 91.73 & 93.93, with this morning’s breach of the 50-DMA providing an extension of the recent bearish impulse in the contract, albeit with the bullish cycle in the contract intact.
- Yields 2bp lower to 3bp higher, curve twist steepens.
STIR: Repo Reference Rates
- Secured Overnight Financing Rate (SOFR): 4.33% (-0.03), volume: $2.632T
- Broad General Collateral Rate (BGCR): 4.31% (-0.02), volume: $1.072T
- Tri-Party General Collateral Rate (TCR): 4.31% (-0.02), volume: $1.026T
- (rate, volume levels reflect prior session
EGB SYNDICATION: Germany 2.90% Aug-56 Bund Tap: Priced
- Reoffer: 97.377 to yield 3.029%
- Size: E4.5bln inc E0.5bln retained by issuer (MNI expects E4-6bln)
- Books closed in excess of E47bln (inc E3.595bln JLM interest)
- Spread set earlier: 2.50% Aug-54 Bund + 2.5bp (mid) (guidance was +3.25bp area)
- HR: 109% vs 2.50% Aug-54 Bund (spot ref: 90.252 / 3.004%)
- Settlement: May 13, 2025 (T+5)
- ISIN: DE000BU2D012
- Bookrunners: Barclays, Citi (B&D), CA-CIB, DZ Bank, GS, JPM. Remaining members of the Bund Issues Auction Group will be invited into the co-lead group
- Timing: TOE: 12:48BST / 13:48CET. FTT immediately
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