EM LATAM CREDIT: U.S. Secretary of State Rubio Visit to Mexico

• US front rates sit between levels seen initially after Friday’s weak payrolls report & ISM manufacturing and the dovish extremes touched overnight.
• Fed Funds futures cumulative cuts from 4.33% effective: 23.5bp Sep (vs 12bp pre-NFP), 41bp Oct, 61bp Dec (vs 35bp), 73bp Jan and 86bp Mar.
• The SOFR implied terminal yield of 3.025% (SFRH7) is unchanged on the day having on Friday closed at technically its lowest since late April. It eyes more than five cuts from current levels.
• Tomorrow sees ISM services headline the docket. Bloomberg consensus looks for a small increase to 51.5 from 50.8 in a second monthly improvement after the 49.9 in May was its lowest since Jun 2024.
• The S&P Global US services PMI was surprisingly firm in the July flash, rising from 52.9 to 55.2 for its highest since Dec, but it has seen some significant differences to ISM Services before. As of June, ISM services was 2.1pts lower than the S&P Global PMI although June 2024 saw ISM services undershoot by a huge 6.1pts.
• Its manufacturing counterpart was weaker than expected across the board, with prices paid pulling back from receive highs, new orders chalking up a sixth consecutive monthly firmly in contraction territory and the employment index at the lowest since mid-2020.
• Post-FOMC Fedspeak continues to be light. Bostic and Hammack on Friday both pushed a measured stance after payrolls. Bostic still only sees one cut this year whilst Hammack said the US labor market still appears healthy, though fresh jobs numbers released Friday constituted a “disappointing report to be sure.”
• Whilst it’s a few weeks away, Powell’s address at the Aug 21-23 Jackson Hole Symposium will be at back of mind.

• RES 4: 1.3681 High Jul 4
• RES 3: 1.3620 High Jul 10 
• RES 2: 1.3448/1.3589 50-day EMA / High Jul 24 
• RES 1: 1.3365 Low Jul 16
• PRICE: 1.3284 @ 17:16 BST Aug 4
• SUP 1: 1.3144 38.2% retracement of the Jan 13 - Jul 1 bull cycle
• SUP 2: 1.3041 Low Apr 14
• SUP 3: 1.3000 Round number support 
• SUP 4: 1.2945 50.0% retracement of the Jan 13 - Jul 1 bull cycle   

A bearish theme in GBPUSD remains intact for now - despite Friday’s rally. Last week’s sell-off resulted in a breach of the bear trigger at 1.3365, the Jul 16 low. The break confirms a resumption of the downleg that started Jul 1 and highlights a clear breach of the trendline drawn from the Jan 13 low. Sights are on 1.3144, a Fibonacci retracement, and 1.3041, the Apr 14 low. Firm resistance is 1.3448, the 50-day EMA. A break of this average is required to signal a reversal.

RRP usage rebounds to $125.730B this afternoon from $97.426B Friday (lowest levels since April 25), total number of counterparties at 26. Lowest usage of the year at $54.772B on Wednesday, April 16 -- in turn the lowest level since April 2021 - compares to July 1: $460.731B highest usage since December 31.