Failed Greece talks hamstring EM trading; Indonesia struggles; Lat-Am may see price swings

By Christine Van Dusen

Atlanta, June 15 – The weekend’s abbreviated talks between the International Monetary Fund and Greece, which failed to yield any proposals related to the debt-saddled sovereign’s bailout plan, hindered trading of emerging markets assets on Monday morning.

“The market seems to be confused whether to rejoice or mourn on every piece of news out of the negotiations,” according to a report from RBC Capital Markets.

Most bonds from emerging markets were quiet and “treading water,” a London-based trader said.

“The market is treading water here until Europe gets up and going and provides some direction. Overall, it’s a weaker tone, with lingering uncertainty,” he said. “Dealers’ and customers’ appetite for risk assumption just keeps getting hammered. So overall, it’s a fairly nervous start, delivering very poor liquidity.”

Not even some strength in U.S. Treasuries could boost most bonds from Asia. Notes from Indonesia moved 1/8 point lower in the belly and ¼ point lower in the long end of the curve, another trader said.

Low-beta bonds from Latin America saw spreads widen during the volatile session, a new York-based trader said.

Five-year credit default swaps spreads for Brazil closed at 250 bps from 246 bps, while Mexico’s moved to 128.50 from 126.50.

High-yield names from the region were quiet and lower, he said, with low volumes.

Sellers outpaced buyers, he said.

© 2015 Prospect News.
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