EM LATAM CREDIT: Pemex: Refining, Production and Supplier Payments – Neutral
(PEMEX; B1/BBB/BB+)
• Refining production at the Dos Bocas plant is processing near its total capacity of 340,000 according to Mexico President Sheinbaum who stated during her daily press briefing that the refinery is processing 300,000 bpd, though it wasn’t clear over what period. We will get the official figures from Pemex for November on December 24th. October and September 2025 showed 191,657 and 194,874 respectively, the highest levels for the year. The government goal is for Pemex to be self-sufficient and self-financing by 2027. We wonder what happens if they are still dependent on the government to meet debt payments in 2027.
• It is encouraging to see the progress made on the refining side, but the verdict is still out on the more important production side. We have maintained since earlier this year that one of the keys to raising production is to pay suppliers what they are owed to encourage the necessary private investment.
• Crude production has recently been running at about 1.65mn bpd, well below the government’s target of about 1.8mn bpd. Pemex CEO Victor Rodriguez has said Mexico needs private investment to boost production and solicited proposals from both national and international firms in late October, but the response so far has been reportedly below expectations according to local news outlets.
• Failing to pay suppliers has been blamed as the government may still owe as much as USD28bn to service providers and intending to pay those with current contracts going forward while the status of those debts from 2024 and prior remained unclear.
• Mexico government owned development bank Banobras allocated MXN250bn (USD13.7bn) to pay suppliers with MXN70bn already spent this year and the balance of MXN180bn scheduled to be paid in December, all of which may be insufficient. The government will need to pay all the supplier debt to improve confidence and encourage private investment.
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USDCAD TECHS: Short-Term Reversal Inside A Bull Channel
- RES 4: 1.4274 High Apr 9
- RES 3: 1.4200 Round number resistance
- RES 2: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
- RES 1: 1.4151 Channel top drawn from Jul 23 low
- PRICE: 1.4009 @ 16:31 GMT Nov 11
- SUP 1: 1.4001 Low Nov 10
- SUP 2: 1.3955 50-day EMA
- SUP 3: 1.3888 Low Oct 29 and a key support
- SUP 4: 1.3874 Bull channel base drawn from the Jul 23 low
USDCAD continues to trade below last week’s high. The latest pullback highlights a potential bearish development and a possible reversal. Resistance at the top of a bull channel, currently at 1.4151, remains intact. The bull channel is drawn from the Jul 23 low. The pair has pierced support at the 20-day EMA, at 1.4021. This exposes the 50-day EMA at 1.3955. For bulls, a break of the channel top would confirm a resumption of the uptrend.
AUD: AUD/USD - Consolidates Above 0.6500, Eyes The 0.6550 Area
The AUD/USD had a range overnight of 0.6515-0.6538, Asia is trading around 0.6530. Risk consolidated its recent gains and the markets saw more breadth, the USD moved lower in response to a weaker ADP jobs report. The AUD/USD has found support and continues to consolidate above 0.6500. The AUD will be one of the main beneficiaries while this positive sentiment dominates the market. The AUD/USD needs a sustained push above the 0.6550 area for the focus to turn back toward the 0.6650/0.6700 year highs. Until then look for some range trading within 0.5490-0.5560.
- MNI AU - AUSTRALIA: Easing Cycle May Be Done. When updated for Q3 CPI, Q2 GDP and the RBA’s November projections, our simple policy reaction function based on the core inflation and output gaps is signaling no further easing. As trimmed mean inflation doesn’t return to the 2.5% band mid-point by the end of 2027 on current assumptions, there is a risk of monetary tightening.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD1.37b), 0.6530(AUD 939m). Upcoming Close Strikes : 0.6520(AUD852m Nov 13), 0.6750(AUD2.17b Nov 14) - BBG
- Data/Event: Home Loans Value, RBA’s Brad Jones holds a fireside chat at the Association of Superannuation Funds of Australia Conference
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
US DATA: Fed's Data Visibility To Be Impaired Despite Re-Opening
What federal government data will the Fed have by its Dec 9-10 meeting?
- The Fed should have the September and October Employment Report data in hand, though the latter could be truncated as noted above. The November report looks likely to come out just after the Fed meeting.
- Inflation is a different story. September CPI of course has been published, and the September PCE data should be in line to be produced by the BEA but with a lag – in 2013 it released the September data on Nov 8.
- That will probably be the last piece of major inflation data before the Fed meeting.
- As noted above, the October CPI report may not be released at all. The November data was scheduled to be released on the morning of the FOMC decision but that looks extremely unlikely now.
- Q3 advance GDP should be in hand, as should September/October retail sales as well as the latest weekly jobless claims.
- Of course there is plenty of "alternative" data with which to make a decision - in our PDF report, we go through various indicators across inflation, employment, and economic activity available to policymakers.
