EM LATAM CREDIT: United Mexican States: Redeeming 4.125% 26 notes

Goldman Sachs write “despite solid auction results and some reduction in bearish pressures from abroad, we still struggle to find compelling reasons to be outright bullish on the long-end. Certainly growth weakness could justify lower yields across the curve, but terminal rate pricing seems reasonable given the information in hand, and the headwinds across diminished hedge value, the lack of fiscal restraint, and potential shifts in the demand landscape remain unperturbed”.

• They suggest that “Section 899 of the House fiscal bill sits as another source of uncertainty that likely doesn’t help to incentivize foreign appetite, reinforcing a greater degree of price sensitivity that we think helps to sustain higher levels of term premia in the Treasury curve”.

Massive Schatz spread goes through.

• DUM5/U5 bought for -8 in ~81.5k.

• Today has been a good Opportunity for Bond Traders to start rolling their Eurex positions into the September Expiry.
• This morning only saw Final European PMIs, and the main focus for Today is still yet to come, the awaited US ISM Mfg.
• Around half the volume of the front Month in Bund is spread related, 73% for the Schatz, 80% Buxl, and 61% Bobl.

Pace completion stands at (as of Friday):

• Buxl: 20%.
• Bund: 18%.
• Bobl: 17%.
• Schatz: 21%.
• BTP: 17%.
• BTS: 20%.
• OAT: 19%.