EM ASIA CREDIT: CEEC - Fitch downgrades to BBB+, stable

Societe Generale find the current level of “10-Year yields stretched, but not extreme, based on fair value models, and stick with a year-end forecast of 1.65%”.

• They note that “long-end JGB yields have seen two separate two standard deviation sell-offs in the past week, with the rise in yields already prompting much discussion around the BoJ’s tolerance”.
• “We have received a series of questions from investors on whether we would expect the BoJ to conduct buying operations in response to rising yields and in what conditions. In short: we think the bar is very high. The BoJ is in a new era of policy; YCC is over, and the focus is now on balance sheet rundown”.
• “BoJ Governor Ueda has repeatedly said the Bank’s stance is to allow market forces to drive the formation of yields and that the BoJ could respond nimbly to calm abnormal bond market moves”.
• “Japan’s 2025 budget already reflects expectations for average interest rates of 2% and above from the next fiscal year, showing government official awareness and expectations of higher yields, and implying a level of tolerance”.

ERK5 97.50/97.4375, bought for 0.25 in 10k.

• SFRJ5 95.87/95.81/95.75/95.68p condor sold at 1.5 in 40k total.

Some suggestions closing.