EM LATAM CREDIT: Mexico: Asia Tariffs – Positive

Weakness in crude benchmarks has extended through the afternoon, with Brent futures now down over 2.5% on the session at ~$63.50. As noted in earlier posts, the trigger for the selloff has been the latest Monthly Oil Market report from OPEC+. The report pointed to a market surplus forming in Q3, contrary to prior expectations for a deficit. 

• Our commodities team notes that OPEC has typically been the most bullish vis a vis supply-demand fundamentals and the Q3 surplus reinforces concerns for an oversupplied market.
• Initial support in COF6 is the November 6 low at $62.84, which shields the bear trigger at $59.97 (Oct 20 low).

Gilts draw support from the bid in EGBs and cross-market inputs (oil lower & equities off highs) detailed in recent bullets.

• Bears failed to close yesterday’s opening gap higher in futures and the technical picture in the contract remains bullish, with key resistance located at 93.98.

2QX5 96.75/96.68p strip, bought for half in 4k.