EM LATAM CREDIT: Sovereign Market Wrap

• Treasuries look to finish weaker, near late session lows after the FOMC held rates steady, Fed vote was 8-4, 3 hawkish dissents and 1 dovish dissent. Tomorrow sees the Bank of England and ECB policy announcement.
• TYM6 trades 110-12.5 (-15) vs. 110-08 low, the bearish development exposes the bear trigger of 109-24. Curves moderately flatter: 2s10s -3.033 at 47.716, 5s30s -3.341 at 92.101.
• Chairman Powell sounded cautious on how the inflation outlook has changed since the March meeting: "For a long time, we've been working on on the hypothesis, really, that would lead to a one time price increase and that that would go away over time. In other words, it would be no further change.
• The Senate Banking Committee on Wednesday approved Kevin Warsh’s nomination to become the next Federal Reserve chair, a crucial step toward confirmation.
• Earlier in day, the Bank of Canada kept policy rate 2.25% as expected Wed but is ready to prevent higher energy prices from causing persistent inflation. "Our baseline forecast assumes oil prices will come down and US tariffs will remain at the current levels. If this holds true, a policy rate close to current settings looks appropriate to support adjustment in the economy and return inflation to target," Governor Tiff Macklem says.
• Tomorrow sees a particularly congested 0830ET data window, with the first look at Q1 GDP, March personal incomes and outlays, the Q1 Employment Cost Index and weekly jobless claims. Private domestic final purchases are on track to see a reasonably solid Q1 although Atlanta Fed’s GDPNow is more pessimistic than consensus when it comes to GDP growth.
• Geopol tensions remain: Crude has extended gains on Wednesday amid concerns that the blockade on Iran could be drawn out. A large US inventory draw was also supportive, as was Trump’s statement that he would consider military action in Iran after rejecting their offer to reopen the Strait.

• RES 4: 1.4015 High Dec 2 ‘25
• RES 3: 1.3985 76.4% retracement of the Nov 5 ‘25 - Jan 30 bear leg
• RES 2: 1.3878/3967 High Apr 13 / High Mar 31 and the bull trigger
• RES 1: 1.3742 50-day EMA 
• PRICE: 1.3670 @ 17:35 BST Apr 29
• SUP 1: 1.3598 Low Apr 27
• SUP 2: 1.3526 Low Mar 9
• SUP 3: 1.3482 Low Jan 30 and key support
• SUP 4: 1.3430 2.0% 10-dma envelope

The short-term bear cycle in USDCAD remains in play and gains are considered corrective. The break through 1.3631, the Apr 21 low, confirms a resumption of the downtrend and paves the way for an extension towards 1.3526, the Mar 9 low and the next key support. Initial resistance is seen at 1.3742, the 50-day EMA. A clear break of this average is required to signal a possible short-term reversal.

• US rates have seen a slight hawkish extension with Powell’s final press conference, again led by 1H27 contracts, but it's small compared to the day’s shift on surging crude oil futures (WTI 1st +7.5%).
• SFRM7 is -0.02 since Powell took to the podium, -0.05 since the decision itself and -0.155 on the day.
• Currently at 96.200 off an earlier low of 96.175, SFRM7 came close to the recent low of 96.165 early on Mar 27 having last been lower in Feb 2025.   
• The terminal implied yield of 3.605% (H8, +9bp) is on track for comfortably its highest close of the Middle East conflict. It has seen a range of 3.075% (Mar 2) - 3.55% (Mar 26) for closes since first US-Israel strikes on Iran on Feb 28.
• FF cumulative moves from 3.64% effective: 0bp Jun, -1bp Jul, -0.5bp Sep, 0bp Oct, +2bp Dec before +9bp Mar 2027 and +10.5bp Jun 2027.