EM LATAM CREDIT: Suzano O/L to Pos at S&P

More curve crosses: latest 2s/10Y ultra posted at 1220:50ET, DV01 $307,000:

• -8,333 TUM5 103-21.62, post time offer vs.
• +3,500 UXYM5 113-23.5, buy through 113-23 post time offer

The German and UK cash curves bull flattened Wednesday, with Bunds lightly outperforming Gilts. 

• There was no obvious headline trigger for the bid that began mid-morning, but strength extended through the session as equities and oil/gas benchmarks moved away from highs.
• 10-year Bund yields ended the session down 6.5bps to 2.47%, with Gilts down 5.4bps to 4.46%.
• The space largely brushed aside a Reuters sources article detailing German defence spending plans, with the piece lacking clarity on whether the touted E60bln of additional spending is for 2025 alone or split across the current parliamentary term.
• Today’s LT OAT and 5-year Gilt auctions saw solid results.
• 10-year EGB spreads to Bunds tightened through the morning, but the moves partially unwound in the afternoon alongside continued equity weakness.
• Eurozone data (strong German factory orders, weak Italian retail sales and in-line Eurozone retail sales) were not market movers.
• Tomorrow’s focus is on the BOE decision. An outcome other than a 25bp cut would be surprising but there will be a number of things to watch: any changes to the guidance and the inflation / growth forecast changes, the vote split and the introduction of new scenarios. (MNI preview here).

• EUR/USD: May09 $1.1300(E1.3bln), $1.1375-85(E954mln), $1.1400-10(E1.1bln); May13 $1.1370-75(E1.7bln)
• USD/JPY: May09 Y141.00($1.3bln), Y145.00($1.9bln); May12 Y142.45-50($1.0bln), Y145.00($1.5bln)
• USD/CAD: May09 C$1.3700($1.2bln), C$1.3750($1.3bln), C$1.4170($1.0bln)