EM LATAM CREDIT: Republic of Panama (PANAMA; Baa3neg/BBB-/BB+) Copper Mine
“Mulino sets his next goal: the future of the Donoso copper mine” – La Prensa
Positive for spreads
• Panama president Jose Mulino declared at a press conference today that social security reforms were passed so now discussions about re-opening Cobre Panama, the copper mine located in Donoso, can begin.
• President Mulino noted that following the mine’s closure in 2023 the country lost 5% of GDP from loss of mining revenue, unemployment and losses to suppliers.
• Upon being elected in 2024, the president appointed business leaders and economists to his cabinet and promised to be business friendly to the private sector.
• Mass civil unrest was triggered in 2023 by the former president’s granting of a 20-year concession to First Quantum Minerals based in Canada. Subsequently, the action was deemed to be unconstitutional, and the concession was pulled triggering multi-billion-dollar lawsuits.
• We think the next step might be for the mine to re-open temporarily to retrieve copper concentrate already mined as part of a process of permanent closure. President Mulino has said that a government report showed there were no immediate environmental or safety risks from re-opening the mine and presented the audit for public debate.
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AUD: Firmer on Corrective Bounce, With Equities Providing Relief
AUD/USD through the London close at new session highs - the pair is shrugging off any concerns over the installation of steel/aluminium tariffs and instead is benefiting from the relative strength of global equities (rate is following the e-mini S&P higher here) and the resultant tailwind for energy. Key resistance is just above at 0.6302, the 50-day EMA. A break would be bullish.
- While tariff headlines have proved negative for iron ore prices (DCE Iron Ore futures are 2% off the week's highs), the run higher off the January lows will be providing underlying support for the currency.
- Intraday USD weakness remains a key driver more broadly in G10 today which, while mild, is looking through the weakness in the belly of the US curve - driven in turn by EGB/Gilt bond supply given the heavy syndication flow today. More importantly, the front-end of the US curve is stable enough - leaving markets content to sell the USD across the US morning as equities and sentiment improved.
- Despite the latest bounce, the AUD trend structure remains bearish. A resumption of the bear leg would open 0.6045, a Fibonacci projection.
FED: US TSY 42D AUCTION: HIGH RATE 4.260%; 51.83% AT HIGH
- US TSY 42D AUCTION: HIGH RATE 4.260%; 51.83% AT HIGH
- US TSY 42D BILL AUCTION: DEALERS TAKE 38.71% OF COMPETITIVES
- US TSY 42D BILL AUCTION: DIRECTS TAKE 3.13% OF COMPETITIVES
- US TSY 42D BILL AUCTION: INDIRECTS TAKE 58.16% OF COMPETITIVES
- US TSY 42D AUCTION: BID/COVER 2.91
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Feb13 $1.0375(E1.1bln), $1.0500(E1.9bln); Feb14 $1.0275-80(E1.9bln), $1.0300-20(E4.0bln), $1.0325(E1.1bln), $1.0400(E3.2bln), $1.0475(E1.5bln); Feb17 $1.0500(E2.3bln)
- USD/JPY: Feb14 Y150.00($1.9bln), Y150.90-00($1.6bln), Y152.00($2.3bln), Y154.00($1.1bln), Y156.00($1.7bln)
- GBP/USD: Feb14 $1.2080-00(Gbp1.2bln)
- AUD/USD: Feb14 $0.6200(A$1.2bln), $0.6275-00(A$1.3bln)
- USD/CAD: Feb14 C$1.4600($1.1bln), C$1.4800($2.1bln)
- USD/CNY: Feb14 Cny7.1500($3.3bln), Cny7.2000($2.6bln), Cny7.3000($2.2bln), Cny7.3400($2.4bln)
