EM LATAM CREDIT: Peru's New Finance and Economy Minister: Fiscal Policy Changes
"changes will be made to the fiscal target, thus going from the established limit of 2.2% for this year, to 2.8%." - El Comercio Peru
The new Peru Minister of Economy and Finance Raul Perez Reyes proposed three policy changes, one of which involves raising the fiscal deficit limit from 2.2% to 2.8%.
Raising the fiscal deficit limit is part of a three pronged strategy of fiscal decentralization whereby municipalities will be given increasing responsibility to make their own investment and spending plans with Federal support.
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US TSYS: Post-Tsy Borrow Estimates React
- Treasury futures extend gains after Tsy financing estimate released (raising current quarter by $391B to $514B), final recommended financing levels release this Wednesday at 0830ET.
- Jun'25 10Y currently +13 at 111-29.5, through resistance of 111-25 (50.0% retracement of the Apr 7 - 11 bear leg) -- focus on next level at 112-12, the 61.8% retracement point.
- Cross asset: BBG US$ index drifting lower to 1220.19 (-5.86); stocks bouncing off second half lows: S&P eminis -8.0 at 5541.75.
US TSYS/SUPPLY: Quarterly Borrowing Estimates Rise In Line With MNI Expectations
Treasury's latest borrowing / financing requirements estimates were slightly higher - but broadly in line with - MNI's estimates: $514B for the Apr-Jun quarter, and $554B for the Jul-Sep quarter (MNI had pencilled in $500B for each quarter).
- Financing needs are -$17B for Apr-Jun (MNI estimated -$14B) with $480B in Jul-Sep (MNI: $430B).
- The assumption that Treasury would maintain its end-quarter cash balance target of $850B proved correct.
- The Apr-Jun borrowing estimate was indeed raised significantly (by $391B) but this was entirely a function of the required cash raise as we discussed earlier today. As Treasury points out, "excluding the lower than assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is $53 billion lower than announced in February.
EURJPY TECHS: Sights Are On The Bull Trigger
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 163.76/164.19 High Apr 25 / High Mar 18 and the bull trigger
- PRICE: 162.47 @ 16:50 GMT Apr 28
- SUP 1: 161.37/159.48 50-day EMA / Low Apr 9
- SUP 2: 158.30 Low Apr 7 and key support
- SUP 3: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle
- SUP 4: 155.60 Low Low Mar 4
The recent pullback in EURJPY appears corrective and the trend condition remains bullish. Last week’s gains reinforce this theme. Key S/T support lies at 158.30, the Apr 7 low. A break of it is required to signal scope for a deeper retracement. This would open 157.02, a Fibonacci retracement. First support to watch is 161.37, the 50-day EMA. Attention is on 164.19, the Mar 18 high and a bull trigger. Clearance of this hurdle would resume the uptrend.
