EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (21 Feb)
Source: BBG
Measure Level Δ DoD
5yr UST 4.3% -8bp
10yr UST 4.4% -8bp
5s-10s UST 15.8 +0bp
WTI Crude 70.3 -2.2
Gold 2935 -4.3
Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 859bp +2bp
BRAZIL 6 1/8 03/15/34 259bp +6bp
BRAZIL 7 1/8 05/13/54 343bp +4bp
COLOM 8 11/14/35 370bp +6bp
COLOM 8 3/8 11/07/54 453bp +7bp
ELSALV 7.65 06/15/35 400bp +2bp
MEX 6 7/8 05/13/37 263bp +5bp
MEX 7 3/8 05/13/55 322bp +6bp
CHILE 5.65 01/13/37 151bp +4bp
PANAMA 6.4 02/14/35 318bp +6bp
CSNABZ 5 7/8 04/08/32 541bp +3bp
MRFGBZ 3.95 01/29/31 294bp +7bp
PEMEX 7.69 01/23/50 631bp +5bp
CDEL 6.33 01/13/35 195bp +4bp
SUZANO 3 1/8 01/15/32 185bp +6bp
FX Level Δ DoD
USDBRL 5.73 +0.03
USDCLP 946.68 +3.53
USDMXN 20.4 +0.11
USDCOP 4081.00 +4.65
USDPEN 3.68 -0.00
CDS Level Δ DoD
Mexico 121 2
Brazil 168 3
Colombia 193 7
Chile 56 2
CDX EM 97.65 (0.16)
CDX EM IG 101.20 (0.06)
CDX EM HY 93.91 (0.17)
Main stories recap:
EM Asia opened calm with small spread widening while CEEMEA followed through similarly with the primary market quiet and people left to focus on idiosyncratic news, at least until US economic data was released which left a whiff of stagflation in the air with a trifecta of bad news. The service sector PMI, existing home sales and the University of Michigan sentiment/expectations indicators fell more than expected while 5-10 year inflation expectations rose to 3.5%. That led to a decline in US equities of about 2%, a rally in US Treasury yields of 8 bps and an overall risk-off mood. Latam benchmark sovereign and corporate bond spreads generally widened 5-7 bps across the board. Bonds of higher quality issuers like Chile as well as high grade corporate bonds quoted on spread like America Movil (AMXLMM) and Bimbo (BIMBOA) kept up better with Treasuries and outperformed.
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ASIA: Government Bond Issuance Today.
- Malaysia to Sell MYR5.5bn 2028 Bonds.
- Bank of Thailand to Sell THB20bn of 2026 Bonds.
- Bank of Thailand to Sell THB20bn of 183-Days FRNs.
- Singapore to Sell S$5.4bn 364-Day Bills.
- South Korea to Sell KRW700bn 20-Year Bonds.
JPY: Yen Underperforms On Higher Equities/Yields, BoJ Hike Nearly Fully Priced
Yen underperformed in the G10 space through Wednesday's session. The yen losing nearly 0.65%, the worst G10 performer. All G10 currencies tracked lower against the USD (except for NOK), while USD indices ticked higher, BBDXY index up 0.1%. USD/JPY tracks near 156.55/60 in early Thursday dealings.
- Yen was weighed by cross asset trends through Wednesday, with global equities mostly higher, with US tech outperforming (Nasdaq nearly +1.3%). Core yields also rose, in the US, Tsy yields are up nearly 4bps for some parts of the curve, led by the 5yr. US-JP yield differentials have stabilized somewhat.
- From a technical standpoint, support to watch is 155.00, the 50-day EMA, and 154.48, a trendline drawn from the Sep 16 ‘24 high. Key resistance and the bull trigger remain at 158.87, the Jan 10 high. Current levels are just above the 20-day EMA at 156.46.
- The BoJ is widely expected to hike tomorrow (96% priced per OIS markets), given little broader market turbulence in the wake of Trump's inauguration at the start of the week. Focus will turn to the outlook if a hike is delivered, with a further full 25bps hike not priced until Q4 of this year.
- Locally today we have Dec trade balance and export figures, along with Japan weekly offshore investment flows.
- Note the following in terms of the FX option expiry space for NY cut later: Y155.00($1.7bln), Y156.00($987mln), Y156.15-20($561mln), Y156.50-60($734mln).
AUD: AUDUSD Flat But A$ Outperforms On US Equity Rally
Risk-sensitive AUD and NOK outperformed the G10 on Wednesday as equities rallied with the S&P closing just shy of a record high. AUDUSD is off its intraday high of 0.6296 to be flat at 0.6273. The USD index was 0.1% higher.
- AUDUSD’s bearish trend continues with lower lows and lower highs. Initial support and bear trigger is 0.6131, while initial resistance is at 0.6302, January 6 high.
- Yen underperformed the G10 driven by higher US yields. As a result AUDJPY rose 0.7% to 98.21, close to the intraday high.
- AUDNZD rose to a peak of 1.1086 following Q4 NZ CPI data and then range traded for the rest of the day finishing up 0.2% to 1.1074.
- AUDEUR is up 0.1% at 0.6025 after a high of 0.6029. AUDGBP trended higher over the European session to be up 0.3% to 0.5093.
- Equities rallied with the S&P rising 0.6% and Euro stoxx +0.8%. Oil prices were lower again with Brent -0.4% to $78.94/bbl. Copper fell 1.1% and iron ore is around $104/t.
- There are no data or events in Australia today.
