EM LATAM CREDIT: Brazil's Embraer (EMBRBZ; Baa3 /BBB- /BBB-): Military Aircraft
“Embraer Advances South African KC-390 Campaign With Denel Deal” – Aviation Week
Neutral for spreads
• Brazil based aircraft manufacturer Embraer signed an MOU (memorandum of understanding) with South Africa based Denel to collaborate on the manufacture and servicing of the tanker transport plane KC-390.
• Embraer has been working on a deal to sell the military plane KC-390 to South Africa since 2023 and in the fall of 2024 said they were close to a sale, according to Aviation Week.
• Brazil is in talks with Poland, Finland and Turkey for them to potentially purchase Embraer's KC-390 military aircraft, according to a Reuters report.
• EMBRBZ issued a new 10-year February 2025 at T+158bps with an order book that was 7x oversubscribed (source: Bloomberg data). The bonds tightened to T+140 by late March and then widened out to last quoted T+188bps with the overall Latam bond market weakening.
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OUTLOOK: Price Signal Summary - Bear Cycle In WTI Remains Intact
- On the commodity front, the recent pullback in Gold appears to be a correction. The move through the 20-day EMA does signal scope for an extension towards the next important support around the 50-day EMA, at $2812.4. However, this week’s gains are a positive development and potentially an early reversal signal. A stronger rally would refocus attention on the next objective at $2962.2, a 2.00 projection of the Nov 14 - Dec 12 - 19 price swing This would also open the $3000.0 handle.
- In the oil space, the current bearish trend condition in WTI futures remains intact and this week’s fresh short-term cycle lows reinforces current conditions. Recent weakness has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $66.41, the Dec 6 ‘24 low. Key short-term pivot resistance is seen at $71.05, the 50-day EMA.
BUNDS: Some of the Highest traded Volumes seen in EGBs Today
- Some pretty outstanding volumes in EGBs and of course Germany, looking purely at Bund, and ignoring the Roll periods, this is the best traded for this time of the day for quite a while, nothing compares in the H5 or Z4 expiries.
- Only 120k lots is spread related in Bund today, with only residual left for Eurex Rolls.
- The Dust has settled somewhat in the past hour or so, focus this afternoon will be on the {us} US ADP and ISM services.
OUTLOOK: Price Signal Summary - EURUSD Bulls Remain In The Driver's Seat
- In FX, EURUSD traded sharply higher Tuesday to a fresh short-term cycle high, and the pair is climbing again, today. This week’s gains have resulted in a clear breach of key short-term resistance at 1.0533, the Jan 27 high, marking a continuation of the reversal that started Feb 3. 1.0677, 50.0% of the Sep 25 ‘24 - Feb 3 bear leg, has been pierced. Sights are on 1.0728 next, the Nov 11 ‘24 high. Initial key support to watch lies at 1.0447, the 50-day EMA. First support is 1.0529, the Feb 26 high and a recent breakout level.
- 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.
- USDJPY traded to a fresh cycle low Tuesday, but has recovered, and the pair is trading inside its recent range. The trend direction remains down and a resumption of weakness would pave the way for an extension towards 146.95, 61.8% of the Sep 16 ‘24 - Jan 10 bull leg. Moving average studies remain in a bear-mode set-up, highlighting a dominant downtrend. Key S/T resistance is 151.30, the Mar 3 high. Clearance of this level is required to signal a base.
