EM LATAM CREDIT: Simpar: Fitch Reaction to Asset Sale - Neutral

• Goldman Sachs write that "incoming data have been broadly consistent with the June ECB staff projections for resilient growth and further disinflation. That said, the ongoing trade tensions pose significant downside risks to the staff forecasts.”
• They there expect rates to be unchanged along with "limited shifts in communication" at this week's meeting ahead of the decision on Thursday.
• "In particular, the Governing Council is likely to note that the incoming data confirm the June projections and that it maintains its data-dependent policy approach.”
• “We expect President Lagarde to reiterate in the press conference that policy is in a good place but that the Council is ready to respond to changes in the economic outlook, emphasising the importance of the incoming data and trade policy developments.”
• “We maintain our forecast for a final cut to 1.75% in September given the re-intensification of EU-US trade frictions, our forecast for weak near-term growth (at home and abroad) and subdued inflation. While the ECB might hold rates at 2% if a favourable trade agreement is reached, we would expect further cuts beyond 1.75% under a 30% tariff rate than in our baseline.”

SOFR & Treasury options segued to downside puts, put spds since midmorning - fading the rebound in underlying futures. Projected rate cut pricing gains slightly vs. early morning (*) levels: Jul'25 at -1.2bp, Sep'25 at -16.1bp (-14.9bp), Oct'25 at -28.7bp (-27.7bp), Dec'25 at -46.2bp (-44.5bp).

• SOFR Options:
  • Block, -5,000 SFRH6/0QH6 98.00 call spd 2.5 net, short March over
  • -5,000 SFRU5 95.75/95.87/96.00 iron flys, 10 vs. 95.82/0.08%
  • +3,000 2QU5 96.62 puts, 8.5 vs. 96.77/0.32%
  • -2,500 SFRV5 96.31 calls, 8.0 ref 96.12
  • 15,000 SFRU5 95.81 put vs. SFRZ5 95.87 puts, cab net
  • Block, +15,000 SFRU5 95.75 put vs 95.81/95.87 call spd, 0.025
  • +10,000 SFRU5 95.87/96.12 call spds vs. 95.62/95.75 put spds, 1.0 net
  • -10,000 SFRU5 95.68/95.81 put spds 5.62/splits
  • -3,000 SFRU5 95.68/95.87 put spds, 9.0 vs. 95.84/0.46%
  • 5,300 SFRZ5 96.00/96.25 strangles
  • Block/screen, 9,000 SFRV5 96.12/96.18/96.31/96.44 broken call condors, 0.5 vs. 96.06/0.05%
  • 2,000 SFRU5 95.81/95.87/96.00/96.06 call condors ref 95.83
  • +4,000 SFRZ5 96.12/96.37/96.62 call flys, 3.5 ref 96.10
• Treasury Options:
  • 3,500 TYQ5/TYU5 111 call spds
  • 2,150 FVQ5 108.5/109.25 call spds 11.5
  • 3,500 USZ5 124/125 call spds ref 113-16
  • 5,000 TUU5 104/104.5 call spds ref 103-24.25
  • over 15,500 TYQ5 111.5/112 1x2 call spds, 3 ref 111-12.5
  • 3,370 TYQ5 111.25/112.25 strangles vs. TYU5 111.5 straddle
  • +23,000 TYU5 112 calls, 27 vs. 111-07/0.31%
  • 5,340 TYQ5 111.5/112 1x3 call spds ref 111-05.5
  • 20,300 TYU5 112 calls, 23 ref 111-02.5
  • -2,500 TYQ5 110.5/111 put spds, 8 ref 111-01.5
  • +3,700 TYU5 112.5 calls, 20 vs. 111-11/0.23% (-20k overnight)
  • 1,000 USU5 93/135 strangle ref 113-01
  • +3,000 TYU5 107 puts, 3 vs. 111-00/0.15%
  • +5,000 TYU5 109.5/110.5 put spd vs. 112.5 calls, 0.0 net
  • +3,000 TYQ5 111.5/112
  • -20,000 TYU5 112.5 calls, 17 early overnight ref 111-04

• RES 4: 175.43 High Jul 11 ‘24 and a key medium-term resistance  
• RES 3: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 2: 173.43 High Jul 12 ‘24
• RES 1: 173.24 High Jul 15
• PRICE: 171.59 @ 15:56 BST Jul 22
• SUP 1: 171.37  Low Jul 22  
• SUP 2: 170.83 20-day EMA 
• SUP 3: 169.32 Low Jul 3   
• SUP 4: 168.07 50-day EMA   

The trend set-up in EURJPY is unchanged, it remains bullish. Fresh cycle highs last week reinforce current conditions. A price sequence of higher highs and higher lows highlights a dominant uptrend and note that moving average studies are in a bull-mode position. Sights are on 173.43, the Jul 12 ‘24 high. Support to watch lies at 170.83, the 20-day EMA. A move below this average would signal scope for a corrective pullback.