EM LATAM CREDIT: Mexico: Sheinbaum Holds Call with Trump

• Fed Funds implied rates are 0-1.5bp lower on the day for 2025 meetings, marginally shoring up a next cut in September whilst year-end expectations widen the gap with the median dot (68bp vs 50bp cuts pencilled in two weeks ago).
• Cumulative cuts from 4.33% effective: 5bp Jul, 28.5bp Sep, 47bp Oct, 68bp Dec, 80bp Jan and 95bp Mar.
• The SOFR implied terminal yield of 3.015% (SFRZ6, -1.5bp) last closed lower on Apr 29 and 30 (and before that pre-US election on Oct 2024) as it increasingly firmly prices five cuts for what’s left of the easing cycle.
• Today’s sole scheduled Fedspeak comes from Chair Powell speaking at the ECB’s Sintra conference. He’s on a panel with ECB’s Lagarde, BOE’s Bailey, BOJ’s Ueda and BOK’s Rhee at 0930ET.
• We have had limited major data releases since his congressional appearances last week, which in turn followed soon after the Jun 18 FOMC press conference, although Thursday did see surprisingly weak domestic demand revisions for Q1 before soft consumer spending in May on Friday.
• His House appearance saw treasuries rise and the USD pull back on headlines that appeared to suggest earlier rate cuts are possible "*POWELL: LOWER INFLATION, WEAKER LABOR COULD MEAN EARLIER CUT" (Bloomberg). However, the full context of this was that he was asked whether he concurs with Gov Waller about a potential path for "good news" to lead to rate cuts, Powell keeps the option conditionally open but not an unsolicited comment or an endorsement - and indeed he also notes potential for later cuts too.
• More broadly, Powell again implied that the September FOMC is the next live meeting. 

• RES 4: 114-14   High Apr 7 and key resistance  
• RES 3: 113-07   76.4% retracement of the Apr 7 - 11 bear leg
• RES 2: 112-23   High May 1 and key resistance
• RES 1: 112-12/15 Intraday high / 61.8% of the Apr 7 - 11 sell-off
• PRICE:‌‌ 112-10 @ 11:14 BST Jul 1 
• SUP 1: 111-22   Low Jun 30         
• SUP 2: 111-05+ 20-day EMA 
• SUP 3: 110-28+ 50-day EMA
• SUP 4: 110-20   Low Jun 20

A bull cycle in Treasury futures remains intact and this week’s continuation higher reinforces current conditions. The contract is approaching the next important resistance at 112-15,  the 61.8% retracement of the Apr 7 - 11 steep sell-off. Clearance of this level would expose 112-23, the May 1 high. Note that the uptrend is overbought, a pullback would unwind this position. First key support to watch is 111-05+, the 20-day EMA.