EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (22 May)

The Treasury General Account rose $26B Friday and Monday, and at $626B is nearing the $639B recent high set post-April 15 tax day. 

• April's tax receipts so far have been robust, toughly 20% above the cumulative amounts at this stage of the 2024 tax year, with the TGA up a similar amount vs a year prior.
• We reiterate that the ongoing tax take in this crucial month looks healthy enough to alleviate concerns that the x-date will be moved earlier rather than later.

Industrial product prices rose 0.5% M/M (NSA) in March, representing stronger price pressures than expected (0.3% survey, 0.6% prior upwardly revised by 0.2pp). While there was no consensus on the Y/Y rates, the index rose 4.7% on that basis, a slight pullback from 5.1% prior.

• The overall M/M story was of energy and petroleum products marking disinflationary progress (and Y/Y energy prices fell 4.9%), but were outweighed by several other commodity groups tha per StatCan "posted significant increases".
• In particular, non-ferrous metal product prices rose 3.8% M/M (led by aluminum/gold/silver), and lumber/wood products up 3.1% M/M (fastest since November 2024). These in turn reflected both market pressures (StatCan attributed the precious metals increase to "continued political instability fuelling safe-haven investment demand", with other products impacted by tariff uncertainty including for lumber and copper.
• Overall raw materials prices conversely fell 1.0% M/M (+0.1% survey, 0.3% prior, no revision), with the Y/Y rise of 3.9% showing continued disinflationary progress from 9.2% prior for a 4-month low - but still a fifth consecutive Y/Y rise.
• Raw materials ex-energy/petroleum product inflation remained elevated on a Y/Y basis but decelerated to 14.7% from 16.1% prior (which was a 34-month high).
• Overall, the broad measures of pipeline price pressures remain elevated. While IPPI looks to be topping out, core measures are mixed, with ex-energy remaining in the 6% area and raw materials ex-energy in double-digits. It's unclear to what degree this will pull back in April, with price developments since March being mixed (gold higher, copper and lumber softer, for example). 

• RES 4: 1.4415 High Apr 1
• RES 3: 1.4296 High Apr 7 
• RES 2: 1.4180 50-day EMA 
• RES 1: 1.3906/4052 High Apr 17 / 20-day EMA  
• PRICE: 1.3819 @ 16:21 BST Apr 22
• SUP 1: 1.3781 Low Apr 21
• 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 

A bearish theme in USDCAD remains intact for now. Fresh trend lows continue to highlight a resumption of the downtrend and signal 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 1.4052, the 20-day EMA.