EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (28 Apr)
Source: BBG
Measure Level Δ DoD
5yr UST 3.81% -5bp
10yr UST 4.20% -3bp
5s-10s UST 39.5 +2bp
WTI Crude 61.9 -1.2
Gold 3347 +27.6
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 874bp +18bp
BRAZIL 6 1/8 03/15/34 272bp +2bp
BRAZIL 7 1/8 05/13/54 368bp +0bp
COLOM 8 11/14/35 454bp +9bp
COLOM 8 3/8 11/07/54 540bp +8bp
ELSALV 7.65 06/15/35 455bp +3bp
MEX 6 7/8 05/13/37 294bp +3bp
MEX 7 3/8 05/13/55 357bp +1bp
CHILE 5.65 01/13/37 166bp +4bp
PANAMA 6.4 02/14/35 350bp +2bp
CSNABZ 5 7/8 04/08/32 639bp +3bp
MRFGBZ 3.95 01/29/31 344bp -5bp
PEMEX 7.69 01/23/50 704bp +6bp
CDEL 6.33 01/13/35 233bp +1bp
SUZANO 3 1/8 01/15/32 225bp +2bp
FX Level Δ DoD
USDBRL 5.66 -0.03
USDCLP 943.83 +9.23
USDMXN 19.6 +0.09
USDCOP 4218.37 +0.72
USDPEN 3.67 -0.00
CDS Level Δ DoD
Mexico 138 (1)
Brazil 183 (2)
Colombia 269 1
Chile 70 (0)
CDX EM 95.76 (0.11)
CDX EM IG 100.31 (0.01)
CDX EM HY 91.13 (0.27)
Main stories recap:
· The macro backdrop was a bit more subdued relative to the volatility experienced in past weeks with global equity prices a bit higher today while US Treasury yields drifted a few bps lower.
· EM issuers were encouraged by the market calm with Asia offering 3 new deals and CEEMEA bringing five new mandates while in LATAM we saw two new mandates from a Chilean and a Mexican issuer.
· Secondary spreads generally widened with sovereigns moving out 2-4bps. Brazil corporate bonds from Vale and Raizen outperformed with spreads tightening 6-9 bps.
· Colombia underperformed with bonds widening about 10 bps. The IMF went subject on their flexible credit line while they continue to consult with the government about reducing the fiscal deficit.
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Historical bullets
USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4292 @ 16:50 GMT Mar 28
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD traded through support at 1.4242 on Wednesday but has recovered. A return lower and clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance is 1.4402, the Mar 20 high.
US FISCAL: Debt Limit "Extraordinary Measures" Pick Up, But Cash Dipping Pre-Tax
Treasury data shows that there were $207B of "extraordinary measures" available to circumvent hitting the debt limit as of Wednesday Mar 26.
- That's the most since Jan 27th and up from $163B a week earlier, from a total $376B available.
- However, Treasury cash in the TGA fell to $316B as of the 26th (and was down to $280B on Thursday), meaning there were a combined $523B of resources available to avert the debt limit, the lowest since the impasse began in January (and half of the starting amount of just over $1T).
- The next couple of weeks will be very important for Treasury, as they represent the biggest tax take of the year. The Congressional Budget Office reported this week that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." Treasury wrote to Congress this month that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
AUDUSD TECHS: Remains Above Support
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6291 @ 16:46 GMT Mar 28
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD is unchanged. A short-term bull theme is intact and the latest move down appears corrective. Key short-term support to watch is 0.6187, the Mar 4 low. Clearance of this level would reinstate a bear threat. First support is at 0.6258, the Mar 21 low. A stronger recovery would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen the bull cycle and resume the uptrend that started Feb 3.
