EM LATAM CREDIT: MNI EM: Sovereign Credit Spread Movement
It seems like the biggest spread movers for the week were the less liquid names like GUATEM, COSTAR, HONDUR and URUGUA while the larger more liquid names had relatively smaller spread movements but generally most names were tighter as part of a broad based tariff relief rally. COLOM bucked the trend with a 7 bps widening as the IMF announced that the existing Flexible Credit Line (FCL) will be subject to a further review of fiscal policy with government officials.
Worth noting is Ecuador's underperformance with bonds widening 85bps this past week due to the country's reliance on oil revenues and as mentioned earlier the 18% drop in oil prices this month. The bonds were also prone to profit taking after the massive rally post election win by market friendly incumbent Daniel Naboa of 354bps MTD.
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STIR: BLOCK: April'25 SOFR Put Spread
- 6,000 SFRJ5 95.75/95.81 put spds at 1.0 ref 95.875 at 1605:23ET
STIR: Fed Cut Pricing Pared Ahead Of Tariff Announcement
Futures-implied Fed rate cut pricing is off session highs as we await the White House's tariff announcement (link to livestream here). Dec Fed funds are currently implying around the fewest cuts seen this week, around 71bp, vs around 78bp this morning, with the pullback coming alongside a nascent risk-on move in equities ahead of the Trump event.
- That's still close to 3 cuts implied, but the first cut is only fully priced by July (2 meetings from now), with the second in October.
- Also potentially of note though overshadowed by the tariffs announcement is commentary scheduled at 1630ET by Fed Governor Kugler (permanent voter) on inflation expectations and policymaking (text + Q&A expected).
| Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Yest (Apr 01) |
| May 07 2025 | 4.30 | -3.5 | -3.5 | 4.28 |
| Jun 18 2025 | 4.17 | -16.3 | -12.8 | 4.12 |
| Jul 30 2025 | 4.02 | -31.3 | -15.0 | 3.96 |
| Sep 17 2025 | 3.86 | -47.5 | -16.2 | 3.79 |
| Oct 29 2025 | 3.75 | -57.7 | -10.2 | 3.69 |
| Dec 10 2025 | 3.63 | -70.5 | -12.8 | 3.57 |
| Jan 28 2026 | 3.57 | -76.2 | -5.7 | 3.52 |
| Mar 18 2026 | 3.48 | -84.6 | -8.4 | 3.44 |
USDCAD TECHS: Monitoring Support
- 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: 1.4415 High Apr 1
- PRICE: 1.4313 @ 17:07 BST Apr 2
- SUP 1: 1.4235 Low Mar 26
- SUP 2: 1.4151 Low Feb 14 and a bear trigger
- SUP 3: 1.4107 50.0% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 4: 1.4011 Low Dec 5 ‘24
USDCAD traded sharply lower Tuesday. Attention is on an important short-term support at 1.4235, the Mar 26 low. A clear break of this level would undermine the bull theme and highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Note that moving average studies continue to highlight a dominant uptrend. A resumption of gains would refocus attention on the bull trigger at 1.4543, the Mar 4 high.
