EM LATAM CREDIT: Uruguay: May Industrial Production - Neutral
(URUGUA; Baa1/BBB+/BBB)
"Uruguay May Industrial Production Rises 3.1% Y/y" - Bbg
Not including oil refining, industrial production only rose .6% YoY, according to Bloomberg.
April industrial production was +7.2% and that followed March of +16.2%.
URUGUA 2037s issued in February 2025 at T+100bp were last quoted T+80bp, which was 27bp tighter since March 31st.
By comparison, much higher rated Republic of Chile 2037s (CHILE; A2/A/A-) issued in January 2025 at T+105bp were last quoted T+92, so 12bp wider than URUGUA 37s.
Uruguay has announced intentions to issue more in the international market this year in order to fund its 2025 budget deficit as well as 2025 interest payments and refinance debt redemptions.
The issuance of what could be up to USD3bn equivalent may influence a repricing of the secondary market.
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US DATA: Federal Deficit Running In Line With Bessent's 6.5-6.7% of GDP Est
The federal budget deficit came in a little higher than expected in May, at $316.0B (vs $314.0B consensus and as estimated by the CBO on Monday), per Treasury's monthly statement. That brought the FY2025 fiscal year (Oct-Sep) to date deficit to $1.365T, up $160B from the equivalent period in 2024 and, through the first 8 months, is set for the highest for a full FY in nominal terms since 2021.
- MNI estimates the 12-month running deficit at around 6.6% of GDP, which is squarely in the middle of Treasury Sec Bessent's estimated 6.5-6.7% of GDP that he mentioned at a congressional committee hearing today.
- Cumulative FY expenditures came in at a new record $4.85T (+7.9% Y/Y) vs revenue of $3.48T (+5.9% Y/Y). Both are set to reach all-time highs this year.
- The 12-month rolling deficit (which helps mitigate timing and other seasonal issues in the monthly comparisons) of $1.99T represents the third consecutive decline after the recent $2.15T peak in February. The 12-month running total of revenue likewise hit a new all-time high $5.11T, but expenditure continued to rise $7.11T (the all-time-high set in March 2021 at $7.62T).
- It would also represent a widening after 6.4% in FY2024 and 6.2% in FY2023.
USDJPY TECHS: Corrective Cycle
- RES 4: 150.49 High Apr 2
- RES 3: 149.28 High Apr 3
- RES 2: 147.67/148.65 High May 14 / 12 and a reversal trigger
- RES 1: 145.46/146.28 High Jun 11 / High May 29 and key resistance
- PRICE: 144.62 @ 16:32 BST Jun 11
- SUP 1: 142.12 Low May 27 and a key support
- SUP 2: 141.96 76.4% retracement of the Apr 22 - May 12 bull leg
- SUP 3: 139.89 Low Apr 22 and a bear trigger
- SUP 4: 138.82 1.50 proj of the Feb 12 - Mar 11 - 28 price swing
A short-term bull cycle in USDJPY remains in play - for now. The latest recovery is considered corrective and the trend condition is bearish. A resumption of weakness would open 142.12, the May 27 low. A clear break of this level would confirm a continuation of the bear leg and open 139.89, the Apr 22 low. MA studies remain in a clear bear-mode position too, highlighting a dominant downtrend. Key short-term resistance is 146.28, the May 29 high.
US TSYS: Extending Highs, 10s Breaching Resistance
- Treasury futures are extending late session gains, Sep'25 10Y futures breaching initial technical resistance of 110-19.5/20.5 (50-day EMA / Jun 11 High) to 110-22.5 (+16).
- Next resistance above at 111-14.5 (High Jun 5 & 61.8% of the May 1 - 22 downleg).
- Curves steeper: 2s10s +1.578 at 46.336, 5s30s +4.726 at 88.731, 10Y yld taps 4.4065% low.
- Cross-asset update: Stocks did extend lows recently, lending to a moderate risk-off theme (SPX eminis taps 6006.25 low, trades 6023.5 last -21.25), Bbg US$ index inches off low of 1206.09 to 1206.50 (-4.09).
