EM LATAM CREDIT: United Mexican States (MEX; Baa2neg /BBB /BBB-): IMF GDP FCST
“IMF predicts Mexico will enter recession in 2025 due to the impact of tariffs” – Milenio Diario
Neutral for spreads
• The IMF cut estimates of world economic growth because of US tariff policy. Mexico experienced one of the biggest drops as the Mexican economy was already slowing prior to the Tariff announcements.
• The IMF slashed its estimate for Mexico real GDP growth to be -.3% for 2025. That was part of a reduction in global growth from 3.3% to 2.8% with almost every part of the world affected including the U.S. whose growth was reduced from 2.7% to 1.8% and China moving from 4.6% to 4% in 2025.
• Mexico’s real GDP grew 1.5% in 2024 but was steadily declining throughout the year. The IMF as recently as a few months ago in January was expecting 1.4% for 2025.
• We posted last week about Fitch’s view of Mexico, with the rating agency expecting real GDP to be -.4% this year. The Mexico finance ministry updated its projections a few weeks ago to a range of 1.5-2.3% which was revised lower from a previous 2-3%. Please see our previous post for more information:
https://mni.marketnews.com/4cHHXIV
• MEX 2037 USD bonds issued at T+230bps January 2025 were last quoted T+256bps, 22 bps wider month to date.
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CANADA PM CARNEY TO MEET GOVERNOR GENERAL AT NOON
- CANADA PM CARNEY TO MEET GOVERNOR GENERAL AT NOON
- CARNEY EXPECTED TO SEEK ELECTION
US TSYS: Available "Extraordinary Measures" Pick Up Slightly From Lows
Treasury has $163B of "extraordinary measures" remaining for authorities to use to fend off hitting the debt limit as of March 19, per the latest release of Treasury data. That's up from $86B on Mar 17 and a low of $34B on Feb 24.
- That's a little under half of the $377B in measures available to Treasury, with most of the amount remaining ($143B) coming from the so-called "G Fund".
- This headroom is in addition to $416B in cash left in the TGA, at last count.
- We haven't seen any changes recently to "x-dates" by when Treasury will run out of cash until the debt limit is lifted.
- Consensus still centers around late July/early August, but much will depend on April's major mid-month tax take. Treasury wrote to Congress last week that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
USDCAD TECHS: Short-Term Outlook Remains Bullish
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4345 @ 16:27 GMT Mar 21
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD is trading closer to its recent lows. The bull cycle that started Feb 14 remains intact and moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Note that the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.
