EM LATAM CREDIT: Province of Santa Fe: New Issue 9Yr Priced

Analysts' outlooks for Wednesday's refunding reflect almost no expectations for any major changes, but there is increasing attention being paid to the likelihood of increased bill issuance ahead as coupon sizes aren't increased until well into 2026 at least. Some selected views in alphabetical order of institution:

• Citi: Next coupon upsizing in Nov 2026 “but there is a growing risk that Treasury can avoid increasing coupons until 2027”. "“Treasury has not given strong guidance on the ‘optimal’ T-bill level, but we think there is scope for this to increase to 25%.”
• Danske: Next upsizing in 1H 2026. "“the Treasury could align with the TBAC recommendation that T-Bills should constitute 20% of net issuance. This would require increasing the size of coupon auctions by approximately USD250bn per year starting in FY26.”
• Deutsche: Next upsizing in August 2026 "with larger adjustments in the 2Y to 5Y sector". When coupons are eventually upsized, “increases would extend over many quarters, keeping net coupon issuance at around 75% of projected borrowing and stabilizing the bill share of total debt around 25% over the longer run.”
• Jefferies: Next upsizing not until after FY 2026.
• Morgan Stanley: Next upsizing in February 2027.
• NatWest: No changes to nominal coupon sizes in 2026, risks leaning to even further delays.
• TD Securities: Next upsizing in Nov 2026. Notes re this week's refunding “we see a risk that the Treasury market reacts positively if Treasury spends a significant amount of time focused on the Fed's balance sheet runoff ending and the resumption of reserve management purchases next year. This could hint to investors that Treasury intends to delay auction size increases (which we expect to occur late next year) or even decrease long-end auction sizes to help bring yields lower.”
• Wells Fargo: Next upsizing in early 2027. “There are some risks of additional federal budget deficit widening next year if the Supreme Court strikes down the President's IEEPA authority for imposing tariffs, but the end of quantitative tightening and the eventual resumption of balance sheet growth by the Federal Reserve should help soak up a big chunk of the bill supply that's coming in the year ahead.”

• Precious metals underperformed on Tuesday amid a risk-off tone in markets and broad gains in the US dollar. The USD index rose back above the 100-mark to fresh recovery highs.
• That price action led an impressive lurch lower for spot gold, which briefly extended declines to 1.8% on the day to $3,930/oz. Currently, gold sits 1.5% lower at $3,941.
• Meanwhile, silver is down by 1.6% at $47.3/oz, albeit also off earlier session lows at $46.88.
• For gold, today’s losses mark an extension of the bear cycle that started Oct 20. The retracement since Oct 20 has allowed an overbought trend condition to unwind. The 20-day EMA has been breached, signalling scope for a test of the 50-day EMA, at $3,867.7.
• For silver, trend signals are bullish, and recent weakness is considered corrective. Support to watch lies at the 50-day EMA, at $46.096, which remains intact. However, a break would signal scope for a deeper retracement towards $41.135, the Sep 17 low.
• Elsewhere, crude prices are lower as oversupply concerns are fuelled by elevated levels of oil at sea while the market also weighs the implications of OPEC’s latest meeting.
• WTI Dec 25 is down 0.9% at $60.5/bbl.
• On Sunday, OPEC+8 agreed to a modest 137kb/d output target hike in December with a pause through Q1.
• WTI futures remain in a corrective cycle for now. Price recently traded through the 50-day EMA at $61.03, signalling scope for a stronger recovery, with sights on key resistance at $65.77, the Sep 26 high.

• Stocks remain in weaker territory late Tuesday, near session lows amid moderate risk-off support in rates. Focus is on late cycle corporate earnings as the US Government shutdown ties the longest in history at 35 days, while Wednesday sees non-government produced economic data: ADP employment, S&P Global US Services/Composite PMI and ISM Services.
• Currently, the DJIA down 308.53 points (-0.65%) at 47032.11, S&P E-Minis down 79.75 points (-1.16%) at 6804.25, Nasdaq down 437.7 points (-1.8%) at 23399.8.
• A mix of Pharmaceutical, Energy, Materials and Information Technology sector shares continued to decline in late trade: Zoetis -12.66%, CDW Corp -10.12%, Albemarle Corp -8.08%, Palantir Technologies -7.93%, Gartner -6.88%, Synopsys -5.97%, Skyworks Solutions -5.96%, Marathon Petroleum -5.92% and Micron Technology -5.76%
• Weighing on the Consumer Discretionary sector - notable declines also reported in cruise lines: Norwegian Cruise Line -15.37%, Carnival Corp -9.35% and Royal Caribbean Cruises -7.09%.
• Conversely, the Financials sector, particularly insurance providers continued to outperform in late trade: Apollo Global Management +5.69%, Willis Towers Watson +3.01%, Global Payments +2.93% and Travelers Cos Inc +2.75%. Health Care sector shares followed: Henry Schein +9.39%, Waters Corp +6.46%, Centene Corp +3.80% and Molina Healthcare 3.30%.
• Stocks expected to announce earnings after the close include: Arista Networks Inc, Live Nation Entertainment, Corteva, Rivian Automotive, Advanced Micro Devices, American International Grp, Mosaic Co, Pinterest, Match Group, AES Corp, Super Micro Computer, Amgen Inc.