US TSYS: Cash Bonds Slightly Cheaper Ahead Of FOMC Decision

Large outflows in Taiwan on Friday, as TSMC dropped 2.75%. India continues to see outflows as we now close in on almost $11b of outflows for the year. There wasn't a single region who saw inflows the past week.

• South Korea: Recorded -$87m in outflows on Friday, bringing the 5-day total to -$154m. YTD flows remain negative at -$1.37b. The 5-day average is -$31m, better than the 20-day average of -$76m but worse than the 100-day average of -$120m.
• Taiwan: Posted -$754m in outflows on Friday, bringing the 5-day total to -$1.09b. YTD flows remain negative at -$3.13b. The 5-day average is -$219m, slightly worse than the 20-day average of -$197m and significantly worse than the 100-day average of -$55m.
• India: Recorded -$253m in outflows on Thursday, bringing the 5-day total to -$1.60b. YTD outflows remain heavy at -$10.86b. The 5-day average is -$320m, close to the 20-day average of -$316m and worse than the 100-day average of -$205m.
• Indonesia: Posted -$36m in outflows on Friday, bringing the 5-day total to -$184m. YTD flows remain negative at -$646m. The 5-day average is -$37m, worse than the 20-day average of -$20m and the 100-day average of -$29m.
• Thailand: Saw +$24m in inflows on Friday, bringing the 5-day total to -$2m. YTD flows remain negative at -$289m. The 5-day average is $0m, better than the 20-day average of -$5m and the 100-day average of -$18m.
• Malaysia: Registered -$25m in outflows on Friday, bringing the 5-day total to -$25m. YTD flows are negative at -$785m. The 5-day average is -$5m, better than the 20-day average of -$26m but slightly worse than the 100-day average of -$27m.
• Philippines: Recorded -$10m in outflows on Friday, bringing the 5-day total to -$43m. YTD flows remain negative at -$129m. The 5-day average is -$9m, worse than the 20-day average of -$2m and the 100-day average of -$3m.

Table 1: EM Asia Equity Flows

Japan's preliminary Q4 GDP was above market expectations. Q3 also saw positive revisions. The q/q annualized outcome was +2.8% versus 1.1% forecast. In q/q terms this was 0.7% (0.3% was forecast, while Q3 was revised up to 0.4% from 0.3% originally reported). In nominal terms, GDP was up 1.3%, also above the 1.2% forecast, with Q3 revised a touch higher. The GDP deflator was 2.8%y/y, in line with market forecasts. 

• The detail showed positive surprises for consumption +0.1%, versus -0.3% forecast (Q3 was a 0.7% rise) and net exports +0.7%ppts contribution to growth (+0.4ppt was forecast). Business spending rose 0.5%, which was below forecasts but still above the negative Q3 outcome.
• Domestic and private demand were still down in q/q terms after firm rises through Q2/Q3 of 2024. Both metrics are still up in y/y terms.
• The GDP deflator was up 0.6% q/q, accelerating from the 0.3% gain in Q3.
• The data suggest a fairly resilient economic growth backdrop. It continues to suggest a bias towards further policy adjustments from the BoJ. The slowdown in consumer spending, whilst not as weak as feared, will be a watch point though. 

Fig 1: Japan Recorded Positive Growth For 3 Straight Quarters 

Source: MNI - Market News/Bloomberg 

RBA-dated OIS pricing is flat to 2bps firmer across 2025 meetings today, led by late-2025 contracts, ahead of tomorrow’s RBA Policy Decision.

• A 25bp rate cut in April remains more than fully priced (118%), while the probability of a cut tomorrow stands at 83%, based on an effective cash rate of 4.34%.
• OIS pricing is mixed compared to pre-Q4 CPI levels on 24 January, with the Aug-25 meeting up 15bps since early February.
• Historically, it would be highly unusual for the RBA to diverge from market expectations, particularly given its lack of any official or unofficial pushback—a stance it has actively taken in the past.
• The last time the RBA defied market expectations by holding rates despite a 75%+ probability of a cut was April 2015, and before that, November 2012. In both instances, the RBA delivered a 25bp cut at the following meeting.

Figure 1: RBA-Dated OIS – Today Vs. Pre-Q4 CPI

Source: MNI – Market News / Bloomberg