EM LATAM CREDIT: Panama: EU Gray List Removal - Positive
(PANAMA; Baa3neg/BBB-/BB+)
"Panama meets technical requirements and is close to leaving the European grey list, stated Vice Foreign Minister Hoyos." - La estrella Panama
The European Commission proposed moving Panama off its high risk list of money laundering and terrorist financing countries.
The European Council needs to accept the recommendation and then Parliament will need to approve the action.
Last year a similar recommendation was made but rejected by parliament due to concerns about maritime issues involving ships sailing under the Panama flag from sanctioned countries.
Panama reacted by issuing a decree October 18, 2024, authorizing the Panama Maritime Authority (PMA) to automatically cancel the registration of vessels, resulting in the cancellation of 107 vessels.
Since 2019 the PMA has removed 650 ships from its registry, which numbers over 8,500 ships, and since October 2024 has delisted 214 ships, according to the Rio Times.
We think there is a good chance Panama gets removed from the list and that would be supportive for both overall reputation and credit ratings.
Panama's fiscal challenges still dominate as the most important issue with credit ratings at the moment, so this improvement in reputation would be a minor positive in the bigger picture.
PANAMA 2035s were last quoted T+258bps, 45bps tighter QTD and 56bps tighter YTD.
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USDCAD TECHS: Rally Meets Resistance
- RES 4: 1.4296 High Apr 7
- RES 3: 1.4111 High Apr 4
- RES 2: 1.4035 50-day EMA
- RES 1: 1.4016 High May 12
- PRICE: 1.3959 @ 17:05 BST May 13
- SUP 1: 1.3814/3751 Low May 8 / 6 and the bear trigger
- 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
USDCAD continues to trade above its recent lows. Despite the latest gains, the trend condition remains bearish and the move higher is considered corrective. A fresh cycle low last week reinforces the bearish theme. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Note that moving average studies are in a bear mode position, highlighting a dominant downtrend. Key resistance is seen at 1.4035, the 50-day EMA.
US DATA: Eggs Lead Rare Food Price Deflation In April
Headline CPI was a little softer than expected in April, actually undershooting consensus by more than its core counterpart.
- At 0.22% M/M (-0.05% prior, 0.30% MNI median), there was a bit of a divergence in food versus energy dynamics.
- Food prices fell 0.1%, versus expectations of a 0.2% rise, and a sharp pullback from 0.4% prior. This was the lowest figure - and first M/M deflation - since November 2020.
- "Food at home" fell 0.4% M/M, the lowest since July 2020, with disinflation/deflation evident across many categories. The most dramatic drop was in eggs, which had risen 35% in the first three months of 2025, but with their 12.7% M/M decline in April (the biggest fall since at least 2000), they're now up "just" 18% for the year.
- This covered up a third consecutive 0.4% M/M rise in "food away from home", marking the most inflationary price dynamics in this category since late 2023/early 2024. The 0.44% reading for April was a 15-month high in its own right.
- Energy's 0.7% rise in contrast marked a reversal higher from prior (-2.4%), and was above-consensus (0.3% MNI median).
- Gasoline prices were a little higher than expected at -0.1% (-0.5% MNI median), versus -6.2% prior.
US TSYS: Rates Quickly Reject Early Highs After Slight CPI Miss
- Treasuries look to finish near late Tuesday session lows - holding a relatively narrow range through the second half. Tsys had extend highs after slighly lower than expected CPI inflation measures.
- There is little in this report alone to suggest a meaningful gap between CPI and PCE - in other words, the slight downside miss in core CPI doesn't carry a major re-interpretation for PCE via the components. Note April core PCE consensus was 0.24% M/M coming into today, and while this may dip slightly we doubt forecasts will be radically changed (core CPI came in at 0.22% M/M).
- As for broader trends, the core CPI six-month rate held at 3.0% annualized for a second month in April having moderated from 3.7% in January, although it’s still a fourth consecutive month above the Y/Y.
- Treasury Jun'25 10Y futures currently trades at 109-31.5 (-5.5) -- breaching support at 110-01+, a Fibonacci retracement point as well as yesterday’s low. Clearance here strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low.
- Curves bear steepened, 2s10s +1.515 at 46.949, 5s30s +1.966 at 81.118.
- The greenback has weakened on Tuesday, eroding a solid portion of the prior session advance. Amid the continued bid for major equity indices, the US dollar traded in a more typical manner with risk, weakening against most G10 peers and in particular against the likes of AUD and NZD.
