LATIN AMERICA: MNI EM Credit Market Wrap - LATAM (26 Mar)
Source: BBG
Measure Level Δ DoD
5yr UST 4.09% +2bp
10yr UST 4.34% +3bp
5s-10s UST 25.5 +1bp
WTI Crude 69.7 +0.7
Gold 3016 -3.7
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 936bp +10bp
BRAZIL 6 1/8 03/15/34 266bp +0bp
BRAZIL 7 1/8 05/13/54 352bp +1bp
COLOM 8 11/14/35 390bp +3bp
COLOM 8 3/8 11/07/54 474bp +5bp
ELSALV 7.65 06/15/35 449bp +2bp
MEX 6 7/8 05/13/37 265bp -0bp
MEX 7 3/8 05/13/55 325bp +1bp
CHILE 5.65 01/13/37 157bp +2bp
PANAMA 6.4 02/14/35 335bp +7bp
CSNABZ 5 7/8 04/08/32 532bp -3bp
MRFGBZ 3.95 01/29/31 294bp -0bp
PEMEX 7.69 01/23/50 651bp +6bp
CDEL 6.33 01/13/35 199bp +1bp
SUZANO 3 1/8 01/15/32 192bp -1bp
FX Level Δ DoD
USDBRL 5.73 +0.03
USDCLP 925.99 +5.32
USDMXN 20.2 +0.10
USDCOP 4130.46 +23.32
USDPEN 3.64 +0.01
CDS Level Δ DoD
Mexico 133 2
Brazil 184 2
Colombia 222 4
Chile 60 2
CDX EM 97.44 (0.11)
CDX EM IG 100.99 (0.02)
CDX EM HY 93.48 (0.16)
Main stories recap:
· More tariffs talk drove US stocks lower and EM benchmark bond spreads wider.
· Asia primary market gave us 2 new deals and 1 mandate while CEEMEA offered 2 new EUR sovereign issues and a USD corporate bond deal. Latam primary was quiet again today.
· In secondary Latam markets, higher beta countries like Colombia moved out 3-5bps while higher quality Mex and Chile and investment grade corporate bonds only widened 1-2bps.
· Brazil corporate bonds outperformed with shorter maturity Minerva and Cosan bonds tightening about 12bps.
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Historical bullets
AUDUSD TECHS: Sights Are On The 100-DMA
- RES 4: 0.6471 High Dec 9 ‘24
- RES 3: 0.6429 High Dec 12 ‘24
- RES 2: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 1: 0.6409 High Feb 21
- PRICE: 0.6357 @ 16:15 GMT Feb 24
- SUP 1: 0.6314/6231 50-day EMA / Low Feb 10
- SUP 3: 0.6171/6088 Low Feb 4 / 3
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.6000 Round number support
A bullish condition in AUDUSD remains intact and last week’s gains reinforce the current bullish set-up. Sights are on key resistance at 0.6410/14 - the 100-dma and the 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg respectively. A clear break of both levels would set the scene for the next leg higher for the pair, making 0.6429 the next target, the Dec 12 ‘24 high. The 50-day EMA undercuts as support, crossing at 0.6314.
US TSYS: Carry-Over Safe Haven FI Bid, US$ Bid as Mexico/Canada Tariffs Proceed
- Treasury futures reversed early session weakness and look to finish near late session highs. Safe haven buying amid ongoing concerns over the Trump administration's trade policy and stocks reversing early support to new multi-week lows were cited by trading desks.
- Tsy futures remain bid (TYH5 +4.5 at 109-26.5) after the latest $69B 2Y note auction (91282CMP3) stops out: 4.169% high yield vs. 4.179% WI; 2.56x bid-to-cover vs. 2.66x prior.
- Currently, Mar'25 10Y futures are through initial technical resistance of 109-24 to 109-27.5 (+5.5), nearing a Bull Trigger level at 110-00. Next resistance at 110-14 (High Dec 14). Curves off lows: 2s10 +0.143 at 23.047%, 5s30s +1.987 at 42.416%.
- Projected rate cuts through mid-2025 steady to firmer vs. this morning levels (*) as follows: Mar'25 steady at -0.5bp, May'25 steady at -7.1bp, Jun'25 at -18.0bp (-17.3bp), Jul'25 at -25.6bp (-23.6bp).
- Cross asset update: Crude mildly higher (WTI +.22 at 70.62; Gold climbing 13.55 at 2949.60; Bbg US$ index off lows at 1286.80 (+.57) as late President Trump comments on Canada & Mexico tariffs proceeding.
US TSYS: Late SOFR/Treasury Option Roundup: Mid-Year Cut Gains Momentum
SOFR & Treasury option flow remained mixed Monday, early SOFR call structure buyers fading this morning's weaker underlying futures continued into the second half reversal. Projected rate cuts through mid-2025 steady to firmer vs. this morning levels (*) as follows: Mar'25 steady at -0.5bp, May'25 steady at -7.1bp, Jun'25 at -18.0bp (-17.3bp), Jul'25 at -25.6bp (-23.6bp).
- SOFR Options:
- Block, 1,250 SFRM5 95.87/96.00 4x5 call spds, 4.0 net, vs. 95.865/0.26%
- Block +5,000 2QJ5 96.25/96.62/97.00 call flys, 6.0 vs. 96.13/0.10%
- over 7,800 SFRH5 96.06 calls, 0.75 last
- -12,000 SFRJ5 95.62/95.68/95.75 put flys, 1.25
- +10,000 SFRU5 96.25/96.37 call spds, 2.0 ref 95.985
- +4,000 SFRM5 96.18/96.31/96.43/96.56 call condors, 0.5 vs. 95.885
- +4,000 0QJ5 96.31/96.62 call spds, 6.0 ref 96.135
- Treasury Options:
- Block, +15,000 wk1 TY 110.75/111.25 call spds 5 ref 109-25.5, exp Mar 7)
- 10,000 TYJ5 106/107 put spds, 1 ref 109-18.5 to -19
- +4,200 TYM5 111/113.5 call spds 2 to 3 over TYU5 104.5/107 put spds
- 2,500 FVJ5 106.25 puts, 13.5 ref 106-28
- 1,200 wk4 TY 109.5/110.25/110.5 broken put trees ref 109-16.5 (expire Fri)
