EM LATAM CREDIT: Uruguay: Potential New Issuance

Below is a comparison of the September FOMC "dot plot" of participants' projections of end-year Fed funds rates, vs the last edition in June:

• The median shifts lower are not really a surprise (3.6% from 3.9% in 2025, 3.4% from 3.6% in 2026, then 3.1% further out and 3.0% longer-run).
• The lowest dot almost certainly belongs to the new Governor Miran who pencilled in a 2.9% dot for end-2025 and presumably sees the lowest in 2027 (2.4%) before coming back up toward neutral in 2028.
• To be sure the 2025 and to a lesser extent 2026 Dot medians were reasonably close calls though with definite shifts lower. There were 9 dots at 3.9% or above for this year and 10 at 3.6% or below, making the latter the 2025 median. We presume that includes the leadership of the Committee including Chair Powell. But interesting that one saw no cuts this year (and it wasn't a voting dissenter) and 6 see this as the last reduction. That's not much changed from the total 9 who saw zero or 1 cuts in the June Dot Plot.
• For 2026 the highest dot has shifted lower by 25bp to 3.9%, but again it's a fairly split median.8 members are at 3.6% or higher (was 10 previously), with 11 at 3.4% or below (vs 9 prior). The mean of the distribution drops lower though with 5 seeing rates at 2.9% or below, vs 2 last time. That's indicative of envisaging more back-loaded cutting.
• As for further out, the 2027-2028 medians are at roughly neutral as expected, 3.1% (2028 was newly introduced in this round of projections).
• There was an interesting shift in the longer-run dots: while the median remains 3.00%, the number above 3.4% has fallen from 6 to 4, while those at 2.50% have shifted up. There are 10 members at 3.00% or below, vs 11 last time - getting a little closer to raising the median. Some of this may be related to the changes in personnel since the June meeting (Philly's Paulson for Harker, Miran for Kugler).

• Treasury futures continue to extend highs after the FOMC annc 25bp rate cut, Fed Gov Miran dissented in favor of a 50bp cut. Tsy Dec'25 10Y futures currently trades +7.5 at 113-25 (113-08 low, 113-25.5 high).
• Nearning initial technical resistance at 113-29 (High Sep 5), suggests scope for an extension through 114-00 next and a test of 114-10, the Apr 7 high (cont). Initial firm support to watch is 112-28, the 20-day EMA.
• Curves back to flatter levels: 2s10s -1.574 at 50.684, 5s30s -1.441 at 104.771.
• Cross asset - Stocks have reversed course: DJIA up 295.27 points (0.65%) at 46042.32, S&P E-Minis down 20 points (-0.3%) at 6645.75, Nasdaq down 192.7 points (-0.9%) at 22135.68.

• SOFR futures rally across the curve on the FOMC announcement (25bp cut vs 26bp priced) and SEP.
• The largest post-announcement gains are through H6-U6 (+8 ticks), with H6 leading the day’s gains at +5.
• The terminal yield is reduced 7bps to 2.86% for now 2bp lower on the day after consistently climbing ahead of the release. It remains within recent post-NFP ranges, and now suggests a little under 125bp of cuts seen ahead after today’s cut.
• FOMC-dated OIS shows October firming up cut odds, currently with 24bp of cuts priced vs closer to 20bp pre-announcement.
• The 2025 dot was lowered from 3.9% to 3.6% in what had been a close call, with analysts narrowly favoring it to remain at 3.9%.
• The 2026 and 2027 dots were as broadly expected however, with the 2026 median lowered from 3.6% to 3.4% and 2027 lowered from 3.4% and 3.1%.
• Miran was the sole dissenter with a 50bp cut (most had seen him dissenting by 50bp or greater this meeting) rather than being joined by Bowman and Waller.