LATAM: Week Ahead: Tariffs, BanRep Rate Decision, Chile Activity, Peru CPI

• 3-month Euribor futures have lifted 2-2.5 ticks back towards session highs on Trump saying EU tariffs are to be 25% on autos and other things per Bloomberg headlines.
• It’s been met with a growth-negative reaction in rates despite it broadly being a repeat of previous threats of auto tariffs of “around 25%” which had earlier in the month been accompanied by threats of 25% or higher tariffs on pharmaceutical products (seen relative sensitivities in the bottom chart below).
• The below charts show clear outperformance for Euribor futures on the day vs US and UK counterparts, but continued prospects of heavy European defense spending and the broader results of the German election have seen sizeable underperformance for both Euribor and Sonia futures vs SOFR since levels shortly ahead of the European close on Friday. 

Wednesday's Europe rates/bond options flow included:

• ERH5 97.625 calls ~4K given at 1.25
• ERM5 97.875/98.00/98.0625/98.1875 call condor 4K given at 4.
• ERM5 97.8125/97.6875ps 1x2, bought for 1.75 in 20k.
• ERM5 97.62/97.75cs sold at 9.75 in 6.25k.
• ERM5 97.875/98.00/98.125/98.25c condor vs 97.625/97.50ps, sold the Condor at 3.25 in 5.5k

WI 7Y has slipped to 4.201% from 4.217% heading into the US Tsy $44B 7Y Note auction (91282CMR9) cutoff at 1300ET, 25.6bp rich to last month's stop: 4.457% high yield vs. WI of 4.465%.