EM LATAM CREDIT: Brazil (Ba1pos /BB /BB) Trade Data and Future Impact of Tariffs
"Brazil March Trade Surplus $8.15b; Est. $7.0b Surplus" – BBG
Neutral
• Brazil March exports rose to USD29.2B, which exceeded the Bloomberg consensus estimate of USD28.6bn, while imports fell to USD21.0bn versus consensus of USD21.6bn.
• Exports may be helped further in the future by production being moved to Brazil as companies adjust their supply chains to accommodate new US tariffs.
• Apple may be evaluating an expansion of their assembly of iPhones in Brazil, according to local media Exame. Apple has been moving production away from China to India and Vietnam in recent years but now with the US raising tariffs on those countries the company is seeking alternatives and Brazil was treated more favorably so far.
• Apple stock was down 14% in two days post the US tariffs announcement on Wednesday. The company has been praised for its efficient and cost-effective supply chain which has now been disrupted by US tariffs.
• iPhone models 13, 14 and 15 are already being manufactured in Sao Paulo by Foxconn and recently the plant was authorized by Brazil regulator Anatel to assemble the iPhone 16.
• Brazil 10-year bonds issued February 2025 at T+220bps were last quoted T+271bps, 25 bps wider than at March 2025 month end. For comparison, Republic of Chile (CHILE; A2 /A /A-) 12 year notes issued at T+105bps in January were last quoted T+136bps and have widened 12bps since month end.
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GBPUSD TECHS: Northbound
- RES 4: 1.3048 High Nov 6 ‘24
- RES 3: 1.2990 High Nov 8 2024
- RES 2: 1.2924 61.8% retracement of the Sep 26 ‘24 - Jan 13 bear leg
- RES 1: 1.2874 High Nov 12 ‘24 & Mar 5
- PRICE: 1.2872 @ 16:06 GMT Mar 5
- SUP 1: 1.2679 Low Mar 4
- SUP 2: 1.2595 20-day EMA
- SUP 3: 1.2554 50-day EMA and a short-term pivot support
- SUP 4: 1.2440 Low Feb 13
The trend outlook in GBPUSD remains bullish and this week’s strong gains reinforce this theme. Note that moving average studies have recently crossed into a bull-mode position, highlighting a potentially stronger bull cycle. Sights are on a climb towards 1.2924, the 61.8% retracement of the Sep 26 ‘24 - Jan 13 bear leg. Initial firm support to watch is 1.2554, the 50-day EMA. A pullback would be considered corrective.
US TSY FUTURES: BLOCK: Jun'25 10Y Sale
- -5,000 TYM5 110-27, sell through 110-27.5 post time bid at 1322:42ET, DV01 $324,000. The 10Y contract trades 110-26 last (-14).
US: FED Reverse Repo Operation
RRP usage inches up to $139.493B this afternoon from $135.257B Tuesday. Compares to $58.770B (lowest level since mid-April 2021) on February 14. The number of counterparties falls to 32 from 50 prior.
