EM LATAM CREDIT: Milei's Party Still Favourites, But Odds Declining

• Over 87,900 TYV5 113 calls, 20-23 ref 111-24.5 to -25.5
• 50k traded at 19 yesterday, total volume over 78k, saw open interest rise by 48,990 to 158,754.

• MBA composite mortgage applications edged -1.4% (sa) lower last week to hold onto most of its refi-driven 11% increase the week prior.
• Indeed, new purchase applications increased 0.1% after 1.4% whilst refis dipped -3.1% after 23.0%.
• Levels relative to 2019 averages: composite 59%, new purchases 62% and refis 53%.
• The 30Y conforming rate was near unchanged on the week at 6.68% (+1bp) after the 6.67% the week prior was the lowest since early April.
• Coupled with a 5bp rise in the average 10Y swap rate over the week and the 30Y mortgage to 10Y swap spread fell below its range of 300bp +/-5bp seen mostly since reciprocal tariff announcements in April vs 285bps averaged in Q1. That is however just one week and it's only a relatively small decline.
• Jumbo loan rates meanwhile have reverted to trading inside regular rates again after a 6bp decline to 6.64%. The regular to jumbo spread of 4bp compares with -3bp the week prior and 12bp the week before that at what was its highest since Oct 2023. 

The Swedish Government updated economic forecasts here

• "Sweden’s economic recovery began in late 2024 but was interrupted in early 2025 when the US administration announced high tariffs against the EU and the rest of the world"..."The tariff agreements signed over the past few months are expected to reduce the risk of an escalated trade conflict, which is positive for growth both in Sweden and among its neighbours. Swedish households have begun to show optimism after a period of low expectations. Going forward, increased domestic demand is seen as particularly vital for Sweden’s recovery."
• "The prospects for recovery are good. From the second half of 2025, real wage growth, lower interest expenditure and an accommodative fiscal policy are expected to contribute to steady growth in household consumption"
• "Overall, growth is expected to be higher next year, and in 2027 the Swedish economy is predicted to be essentially in balance. "
• "The labour market recovery is expected to be slightly delayed, and employment is forecast to rise at a faster rate in 2026."