LATAM FX: USD Index Extends Recovery, Local Currencies Suffer
May-28 19:23
- The greenback continues to trade with a more constructive manner on Wednesday, as a stable equity backdrop provides a more supportive tone for the USD index. This has allowed the DXY to extend the bounce off the week’s lows to 1.2%, narrowing the gap to both the 100.00 handle and initial resistance at the 20-day EMA. The FOMC minutes had no impact on markets.
- Latin American currencies have been notable laggards on the session, as markets react to the firmer dollar and weigh risks related to fiscal and monetary policy trajectories across the region. Both the Mexican peso and the Brazilian real have fallen 0.75%, with the former taking a hit leading into Banxico’s quarterly report, which downgraded both 2025 and 2026 growth forecasts for the Mexican economy.
- At the presentation of the QIR, Banxico Governor Rodriguez stated that private consumption is showing a downward trend and that the risk of the US imposing more tariff measures persists. Despite this, the central bank is leaving the inflationary episode behind them.
- The second reading of US Q1 GDP/PCE will take focus on Thursday, before markets turn their attention to Friday’s release of April Core PCE. Central bank rate decisions for the BOK and SARB are also scheduled.
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US STOCKS: Late Equities Roundup: Energy & Utility Shares Lead Gainers
Apr-28 19:18
- Stocks are mixed late Monday, off second half lows as markets trade in a quiet narrow session range. Currently, the DJIA trades up up 69.08 points (0.17%) at 40181.55, S&P E-Minis down 7.25 points (-0.13%) at 5542.75, Nasdaq down 66 points (-0.4%) at 17316.22.
- On the positive side, Energy and Utility sector shares led gainers in late trade: Eversource Energy +2.11%, EQT Corp +1.90%, Vistra Corp +1.60%, AES Corp +1.49% and Evergy +1.40%.
- Separately, pharmaceutical and health care stocks traded firm with Centene Corp +3.00%, AbbVie +2.92% and Gilead Sciences +2.65%.
- Paring last week's gains, Information Technology and Consumer Discretionary sectors continued to underperform in the second half, semiconductor makers weighing on the IT sector: NVIDIA -3.17%, Micron Technology -2.18%, Zebra Technologies -1.85%, First Solar -1.74% and QUALCOMM -1.42%.
- E-commerce and autos weighed on the Discretionary sector with Tractor Supply -2.70%, eBay Inc -1.85%, Chipotle Mexican Grill -1.44%, Amazon.com -1.36% and Tesla -1.24%.
- Expected earnings announcements after today's close: Alexandria Real Estate, Cadence Design, SBA Comm, Crown Holdings, Welltower, Solaris Energy, Noble Corp, Brown & Brown, Nucor Corp, Teradyne Inc, Universal Health Services, EZCORP and Waste Management Inc.
US TSYS: Post-Tsy Borrow Estimates React
Apr-28 19:10
- Treasury futures extend gains after Tsy financing estimate released (raising current quarter by $391B to $514B), final recommended financing levels release this Wednesday at 0830ET.
- Jun'25 10Y currently +13 at 111-29.5, through resistance of 111-25 (50.0% retracement of the Apr 7 - 11 bear leg) -- focus on next level at 112-12, the 61.8% retracement point.
- Cross asset: BBG US$ index drifting lower to 1220.19 (-5.86); stocks bouncing off second half lows: S&P eminis -8.0 at 5541.75.
US TSYS/SUPPLY: Quarterly Borrowing Estimates Rise In Line With MNI Expectations
Apr-28 19:08
Treasury's latest borrowing / financing requirements estimates were slightly higher - but broadly in line with - MNI's estimates: $514B for the Apr-Jun quarter, and $554B for the Jul-Sep quarter (MNI had pencilled in $500B for each quarter).
- Financing needs are -$17B for Apr-Jun (MNI estimated -$14B) with $480B in Jul-Sep (MNI: $430B).
- The assumption that Treasury would maintain its end-quarter cash balance target of $850B proved correct.
- The Apr-Jun borrowing estimate was indeed raised significantly (by $391B) but this was entirely a function of the required cash raise as we discussed earlier today. As Treasury points out, "excluding the lower than assumed beginning-of-quarter cash balance, the current quarter borrowing estimate is $53 billion lower than announced in February.
