EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (29 Apr)
Source: BBG
Measure Level Δ DoD
5yr UST 3.77% -4bp
10yr UST 4.17% -4bp
5s-10s UST 39.7 +0bp
WTI Crude 60.3 -1.8
Gold 3322 -22.0
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 881bp +10bp
BRAZIL 6 1/8 03/15/34 272bp +0bp
BRAZIL 7 1/8 05/13/54 369bp +1bp
COLOM 8 11/14/35 450bp -5bp
COLOM 8 3/8 11/07/54 535bp -5bp
ELSALV 7.65 06/15/35 466bp +11bp
MEX 6 7/8 05/13/37 294bp +0bp
MEX 7 3/8 05/13/55 356bp -1bp
CHILE 5.65 01/13/37 167bp +1bp
PANAMA 6.4 02/14/35 349bp -1bp
CSNABZ 5 7/8 04/08/32 639bp -0bp
MRFGBZ 3.95 01/29/31 341bp -3bp
PEMEX 7.69 01/23/50 704bp +1bp
CDEL 6.33 01/13/35 224bp -10bp
SUZANO 3 1/8 01/15/32 225bp +0bp
FX Level Δ DoD
USDBRL 5.63 -0.02
USDCLP 945.34 +1.51
USDMXN 19.6 -0.01
USDCOP 4188.14 -30.23
USDPEN 3.67 -0.00
CDS Level Δ DoD
Mexico 135 (4)
Brazil 180 (4)
Colombia 266 (6)
Chile 68 (1)
CDX EM 95.75 (0.01)
CDX EM IG 100.35 0.04
CDX EM HY 91.13 0.00
Main stories recap:
· Supportive macro backdrop with equity prices up and U.S. Treasury yields down, but generally wider spreads in EM Credit.
· EM primary was still active globally with a new Korea Ocean 5-year out of Asia and then two new issues in CEEMEA for Kingdom of Bahrain and Kazakhstan’s Baiterek. Worth noting that yesterday’s Korea deals from Posco and Kookmin Bank were 9x and 13x oversubscribed respectively.
· In Latam, investor meetings were being wrapped up for Chile paper company Celulosa Arauco and Mexico chemicals company Orbia while a new mandate for Mexican government owned development bank BNCE was announced today.
· EM Asia secondary spreads tightened but CEEMEA spreads generally widened and then LATAM followed through similarly.
· Higher beta El Salvador, Ecuador and Argentina benchmark bonds widened 10 bps while most low beta bonds widened 1-2 bps. Colombia sovereign bonds outperformed today after yesterday’s sell off, tightening 5 bps.
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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.
