LATAM: Week Ahead – US Tariffs, BRICS Summit, June CPI Inflation, BCRP Rates
Jul-04 15:42
- Mexico: both headline and core CPI inflation are expected to remain above the target range ceiling in June, with the core rate rising to 4.23% y/y, even as the headline rate edges lower. Rising core pressures may prompt Banxico to slow the easing pace ahead, with the market looking for further clues on this in next week’s minutes. May IP data also cross next week.
- Brazil: attention at the start of the week will be on the BRICS summit, set to be held in Rio on July 6-7. On the data front, June CPI stats are the focus, with the headline IPCA rate expected to remain around 5.3% y/y. May retail sales and services volumes figures are also due.
- Chile: CPI inflation is expected to remain above target at 4.4% y/y in June, although this shouldn’t stop the BCCh from potentially cutting rates later this month. The latest BCCh economist and traders surveys will provide updated interest rate forecasts next week.
- Colombia: attention also turns to June CPI data in Colombia, where both the headline and core rates are expected to finally dip below 5%. The disinflation process remains slower-than-expected, however, which looks set to keep BanRep on a cautious footing.
- Peru: the BCRP is expected to keep its policy rate unchanged at 4.50% on Thursday, although risks are skewed towards the possibility of a renewed cut following benign inflation data earlier this week.
- Argentina: May industrial production and construction activity are the data highlights next week.
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US 10YR FUTURE TECHS: (U5) Testing Resistance
Jun-04 15:40
- RES 4: 112-04+ High May 2
- RES 3: 111-25 High May 7
- RES 2: 111-05+ High May 9
- RES 1: 111-02 High May 30, Jun 2 & 4
- PRICE: 111-00 @ 16:38 BST Jun 4
- SUP 1: 109-26/12+ Low May 29 / 22 and the bear trigger
- SUP 2: 109-09+ Low Apr 11 and key support
- SUP 3: 109-00 Round number support
- SUP 4: 108-25+ 0.764 proj of the Apr 7 - 11 - May 1 price swing
Treasury futures are holding on to the bulk of their recent gains. A dominant bear cycle remains in play for now, and recent gains still appear corrective. However, the contract has breached an important resistance at 110-23, the May 16 high. A clear breach of this level would undermine a bear theme and highlight a stronger reversal, exposing 111-05+, May 9 high. For bears, a resumption of weakness would refocus attention on 109-12+, May 22 low.
US TSY OPTIONS: Midday Update: Fading Post Data Rally
Jun-04 15:34
- over 13,400 FVN5 108.25 puts 24.5 ref 108-10.75
- 3,000 TYN5 107.5/109/110 1x3x1 broken put flys ref 111-01
- 1,200 USN5/USQ5 120 call spds 18 ref 113-08
- +30,000 TYN5 108 puts, 2
- +10,000 FVN5 109.5 calls, 4.5
FED: US TSY 17W BILL AUCTION: HIGH 4.205%(ALLOT 13.84%)
Jun-04 15:32
- US TSY 17W BILL AUCTION: HIGH 4.205%(ALLOT 13.84%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 33.76% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 4.02% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 62.22% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 3.13
