JGBS: Cash Bonds Slightly Richer, Initial Rengo Wage Outcome Due

Muted flows on Tuesday, with small inflows into most regions, however India continues to see outflows with a total outflow ytd of $9.5b.

• South Korea: Recorded +$84m in inflows yesterday, bringing the 5-day total to -$40m. YTD flows remain negative at -$1.40b. The 5-day average is -$8m, better than the 20-day average of -$87m but worse than the 100-day average of -$137m.
• Taiwan: Posted +$186m in inflows yesterday, bringing the 5-day total to +$1.39b. YTD flows remain negative at -$2.49b. The 5-day average is +$279m, better than the 20-day average of -$95m and the 100-day average of -$71m.
• India: Recorded -$262m in outflows yesterday, bringing the 5-day total to -$740m. YTD outflows remain significant at -$9.58b. The 5-day average is -$148m, better than the 20-day average of -$348m but worse than the 100-day average of -$186m.
• Indonesia: Posted -$29m in outflows yesterday, bringing the 5-day total to -$290m. YTD flows are negative at -$547m. The 5-day average is -$58m, worse than the 20-day average of -$19m and the 100-day average of -$15m.
• Thailand: Saw +$30m in inflows yesterday, bringing the 5-day total to +$74m. YTD flows remain negative at -$256m. The 5-day average is +$15m, better than the 20-day average of -$10m and the 100-day average of -$16m.
• Malaysia: Registered +$21m in inflows yesterday, bringing the 5-day total to -$38m. YTD flows are negative at -$740m. The 5-day average is -$8m, better than the 20-day average of -$33m but worse than the 100-day average of -$26m.
• Philippines: Recorded -$11m in outflows yesterday, bringing the 5-day total to -$3m. YTD flows remain negative at -$104m. The 5-day average is -$1m, in line with the 20-day average of -$3m and the 100-day average of -$3m.

Table 1: EM Asia Equity Flows

The latest ACGB May-41 supply auction continued the recent trend of firm pricing, with the weighted average yield printing 0.22bps through prevailing mids (per Yieldbroker).

• The cover ratio increased to a robust 3.7875x, reflecting solid demand.
• Today's auction was likely bolstered by steeper 3/10 and 10/20 yield curves and the recent improvement in sentiment toward longer-dated global bonds.
• In early post-auction trading, XM futures and the bond line have shown little movement.

USD/JPY is continuing to recover, the pair last near 152.90, near session highs and up 0.30% versus end NY close levels from Tuesday trade. Japan markets return today after yesterday's public holiday, so there could be some focus on the Tokyo fix, as last week USD/JPY tracked lower in the lead up to the fixing. Other G10 movements are close to unchanged at this stage.

• For USD/JPY technicals, we are testing the Feb 6 highs of 152.89. Note the Jan 27 low of 153.72 is a further potential upside target. The 50-day EMA is back at 154.70. Note as well some option expiries today (for NY cut later), Y153.00-15($884mln), Y153.50-70($1.7bln), which could influence spot.
• The firmer core yield backdrop is aiding the USD/JPY rebound, weakness in yen against crosses. US-JP yield differentials have ticked up from recent lows, the 10spread more so than the 2yr. The 10yr was last +321bps, against recent lows of +313bps.
• BoJ Governor Ueda will appear in parliament at 10:05am local time, so in just under an hour.