EM LATAM CREDIT: Mexico's Pemex Moves Funding to Exploration and Production

• USD/JPY: Apr24 Y140.00($1.6bln); Apr28 Y140.00($1.1bln)
• USD/CAD: Apr25 C$1.3800($1.9bln), C$1.4000($1.6bln)

MBA mortgage applications saw a second week of declines to unwind a pop higher early in April as rates rebounded. Current swap rates suggest the climb in mortgage rates is likely to slow ahead but also won’t offer much of a tailwind for mortgage activity. 

• MBA composite mortgage applications fell -12.7% (sa) last week to build on the -8.5% previously to have now fully reversed the 20% increase two weeks ago.
• Refis -20% after -12.4% and 35%, new purchases -6.6% after -4.9% and 9.2%.
• It came from another step higher in the 30Y conforming rate, up 9bps to 6.90% after a 20bp increase the week prior, to leave rates at their highest since mid-Feb.
• There should be some respite in the short-term ahead, with 10Y swap rates currently 6-7bp lower than last week’s average.
• For now though, it’s helped new purchases full back further from what had been their highest since Jan 2024 (most recently at 59% of 2019 levels) whilst refis are 39% of 2019 levels. 

• Gilt is seeing further upside traction, the initial move happened on the Open, as the DMO revised its gilt remit surprisingly lower, this was followed by a quite poor set of Prelim PMIs.
• The pure next Technical level comes at 93.44 76.4% retracement of the Apr 7-9 sell-off.

But looking at Yield terms, next supports are seen at:

• 4.460% = 93.39.
• 4.363% = 94.27 (April and 2025 low).

(Chart source: MNI/Bloomberg).