EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (16 Apr)
Source: BBG
Measure Level Δ DoD
5yr UST 3.91% -8bp
10yr UST 4.28% -5bp
5s-10s UST 37.2 +3bp
WTI Crude 62.6 +1.3
Gold 3339 +108.8
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 928bp +9bp
BRAZIL 6 1/8 03/15/34 296bp +10bp
BRAZIL 7 1/8 05/13/54 390bp +7bp
COLOM 8 11/14/35 477bp +13bp
COLOM 8 3/8 11/07/54 551bp +18bp
ELSALV 7.65 06/15/35 502bp +10bp
MEX 6 7/8 05/13/37 308bp +6bp
MEX 7 3/8 05/13/55 366bp +6bp
CHILE 5.65 01/13/37 180bp +6bp
PANAMA 6.4 02/14/35 361bp +11bp
CSNABZ 5 7/8 04/08/32 700bp +14bp
MRFGBZ 3.95 01/29/31 366bp +2bp
PEMEX 7.69 01/23/50 744bp +16bp
CDEL 6.33 01/13/35 243bp +7bp
SUZANO 3 1/8 01/15/32 254bp +4bp
FX Level Δ DoD
USDBRL 5.87 -0.02
USDCLP 969.03 -2.75
USDMXN 20.0 -0.13
USDCOP 4305.77 -48.74
USDPEN 3.73 -0.01
CDS Level Δ DoD
Mexico 151 7
Brazil 200 6
Colombia 282 16
Chile 79 4
CDX EM 96.37 (0.04)
CDX EM IG 99.92 0.00
CDX EM HY 90.63 0.00
Main stories recap:
· U.S. equity prices opened lower on negative Nvidia comments then the sell off accelerated after a Federal Reserve Chairman Powell speech with US Treasuries rallying in a flight to quality.
· EM CEEMEA benchmark bond spreads were mixed with low beta unchanged to tighter while some higher beta names in Africa widened out 10-20bps amid a relative calm in the market at the time.
· LATAM spreads widened, especially in the afternoon once the U.S. equity sell off picked up steam.
· There were some outliers like YPF whose bonds outperformed in sympathy with a better sentiment towards the Argentina sovereign as well as rebounding oil prices, up 2% today.
· Bond spreads for most of the Colombia bond curve widened 13-20 bps as the market digested yesterday’s USD3.9bn two tranche issuance. The new 5- and 10-year notes that came at a concession tightened 8-10bps.
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Historical bullets
EURJPY TECHS: Bullish Structure
- RES 4: 164.55 High Jan 7
- RES 3: 164.08 High Jan 24 and a key resistance
- RES 2: 162.70 High Jan 28
- RES 1: 162.56 High Mar 17
- PRICE: 162.25 @ 16:28 GMT Mar 17
- SUP 1: 159.50 20-day EMA
- SUP 2: 158.74 Low May 5
- SUP 3: 155.60 Low Mar 4
- SUP 4: 154.80 Low Feb 28 and a bear trigger
A bull cycle in EURJPY remains in play and the cross is trading just ahead of last week’s cycle high. Price has recently breached a resistance at 161.19, the Feb 13 high. A clear break of the hurdle strengthens a bullish condition and opens 162.70 next, the Jan 28 high. On the downside, initial support to watch is 159.50 the 20-day EMA. Key support has been defined at 154.80, the Feb 28 low.
US: Voters Sceptical Of DOGE/Economy But Increasingly Think US Is On Right Track
A NBC News survey has found that, “voters are open, narrowly, to an effort to tackle inefficiencies in government. But they are concerned about billionaire Elon Musk and how his Department of Government Efficiency is executing those cuts”.
- The survey comes as Americans are increasingly sceptical of Trump's handling of the economy. The Hill notes, "the polls signal frustration over steep losses in the stock market and a potential trade war with some of America’s closest allies."
- More positively for Trump, NBC reports: “More registered voters say the U.S. is heading in the right direction (44%) than at any point since early 2004, though a majority (54%) still say the country is on the wrong track.”
Figure 1: "What best Describes what you Think About Elon Musk, DOGE, and their Efforts to Reduce Spending and the Size of the Federal Government
Source: NBC News
USDJPY TECHS: Shallow Correction
- RES 4: 154.80 High Dec 12 ‘24 and a key resistance
- RES 3: 151.45 50-day EMA
- RES 2: 150.18/151.30 High Mar 5 / 3 and a key near-term resistance
- RES 1: 149.46 20-day EMA
- PRICE: 148.55 @ 16:27 GMT Mar 17
- SUP 1: 146.54 Low Mar 11 and the bear trigger
- SUP 2: 145.43 2.0% 10-dma envelope
- SUP 3: 145.00 Round number support
- SUP 4: 144.13 76.4% retracement of the 16 ‘24 - Jan 10 bull leg
The trend direction in USDJPY remains down and the latest recovery appears corrective. A fresh cycle low on Mar 11 strengthens a bearish theme. The move down resulted in a print below 146.95, 61.8% of the Sep 16 ‘24 - Jan 10 bull leg. This opens 145.92 next, the Oct 4 2024 low. Moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend. Key short-term resistance is unchanged at 151.30, Mar 3 high.
