EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (15 May)
Source: BBG
Measure Level Δ DoD
5yr UST 4.06% -10bp
10yr UST 4.45% -9bp
5s-10s UST 38.1 +1bp
WTI Crude 61.7 -1.4
Gold 3231 +53.5
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 857bp +29bp
BRAZIL 6 1/8 03/15/34 260bp +6bp
BRAZIL 7 1/8 05/13/54 369bp +6bp
COLOM 8 11/14/35 416bp +7bp
COLOM 8 3/8 11/07/54 504bp +5bp
ELSALV 7.65 06/15/35 418bp +7bp
MEX 6 7/8 05/13/37 273bp +3bp
MEX 7 3/8 05/13/55 335bp +1bp
CHILE 5.65 01/13/37 155bp +2bp
PANAMA 6.4 02/14/35 324bp -0bp
CSNABZ 5 7/8 04/08/32 556bp +12bp
MRFGBZ 3.95 01/29/31 270bp +7bp
PEMEX 7.69 01/23/50 645bp -14bp
CDEL 6.33 01/13/35 201bp +8bp
SUZANO 3 1/8 01/15/32 212bp +7bp
FX Level Δ DoD
USDBRL 5.68 +0.04
USDCLP 939.04 -3.71
USDMXN 19.5 +0.12
USDCOP 4200.38 +17.62
USDPEN 3.69 +0.01
CDS Level Δ DoD
Mexico 121 4
Brazil 167 3
Colombia 228 0
Chile 57 1
CDX EM 96.90 (0.01)
CDX EM IG 100.93 (0.02)
CDX EM HY 92.82 (0.00)
Main stories recap:
Comments
· Weak U.S. retail sales and lower than expected producer price inflation added up to big gains in U.S. Treasuries and a positive move in stocks as well.
· The EM primary market cooled off with less activity than in past days while in the secondary market spreads generally widened across Asia, CEEMEA and LATAM.
· Pemex was the star performer as a major bank moved their recommendation to market weight from underweight with the view that the government might announce a support package soon in advance of billions of USD debt coming due in the next five years.
· Telefonica Moviles Chile bonds underperformed in the wake of disappointing earnings and anxiety about the sale of the subsidiary by its Spain based parent Telefonica.
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Historical bullets
USDCAD TECHS: Bounces Well
- RES 4: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 3: 1.4415 High Apr 1
- RES 2: 1.4249 50-day EMA
- RES 1: 1.4028/4151 Low Apr 3 / Low Feb 14
- PRICE: 1.3934 @ 16:10 BST Apr 15
- SUP 1: 1.3829/22 Low Apr 14 / Low Nov 6 ‘24
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
USDCAD has bounced off recent lows but a bearish theme remains intact for now. Last week’s move down marked a resumption of the downtrend and has signalled scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear -mode position, highlighting a dominant downtrend. First resistance to watch is 1.4028, the Apr 3 low.
US TSYS: Sentiment Cools Ahead Wednesday Data, Tariff Headline Risk
- Treasuries look to finish modestly higher for the most part Tuesday, curves flatter (2s10s -3.888 at 48.575) with short end rates underperforming. Cautious early optimism over tariff relief (or delay) for autos buoyed rates and stocks in early trade, evaporated in the second half, markets wary of tariff related headline risk.
- Treasuries inch off lows earlier after Empire Mfg comes out less negative than expected, both import & export price index figures lower than expected, prior import prices down revised while prior export prices are up-revised.
- The Empire manufacturing survey improved by more than expected in April to -8.1 (cons -13.5) after a weak -20.0 in March although forward-looking aspects in particular make for sour reading.
- Overall import prices fell -0.1% M/M (cons 0.0%) in March after a downward revised 0.2% (initial 0.4%) in February. For a better idea of underlying price pressures, imports ex petroleum prices saw a larger miss with 0.0% M/M (cons 0.3) after 0.1% (initial 0.4%).
- Jun'25 10Y futures currently +7.5 at 110-31.5, nearing initial technical resistance at 111-00+/111-20 (20-day EMA / High Apr 9). Cross asset: Bbg US$ index mear highs: +3.84 at 1233.90, stocks weaker w/ SPX eminis -8.75 at 5432.00.
- Focus on midweek data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index while Fed Chair Powell will discuss his outlook at the Economic Club of Chicago (text, Q&A) at 1330ET.
AUDUSD TECHS: Maintains A Bullish Tone
- RES 4: 0.6428 50.0% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6409 High Dec 9 and a key resistance
- RES 2: 0.6389 High Apr 3 and a reversal trigger
- RES 1: 0.6383 3.0% 10-dma envelope & Intraday High
- PRICE: 0.6360 @ 16:09 BST Apr 15
- SUP 1: 0.6232 20-day EMA
- SUP 2: 0.6116/0.5915 Low 10 / Low Apr 9 and the bear trigger
- SUP 3: 0.5830 2.000 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.5729 2.236 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD maintains a short-term bullish tone following a strong reversal last week. The pair has breached the 50-day EMA, at 0.6267. The break of this average strengthens the reversal and signals scope for a continuation higher, towards 0.6389, the Apr 3 high and the next important resistance. For bears, a resumption of weakness would refocus attention on 0.5915, the Apr 9 low and bear trigger. First support lies at 0.6232, the 20-day EMA.
