JGBS: Futures Weaker Overnight With Us Tsys, PPI & 20Y Supply Due

Mixed Flows to end the week on Friday. Taiwan started last week with heavy outflows, however saw inflows to end the week. India continues to see strong outflows with a net outflow of $9.2b for the year.

• South Korea: Recorded -$169m in outflows yesterday, bringing the 5-day total to -$210m. YTD flows remain negative at -$1.21b. The 5-day average is -$42m, better than the 20-day average of -$70m but worse than the 100-day average of -$142m.
• Taiwan: Posted +$649m in inflows yesterday, reducing the 5-day total to -$774m. YTD flows are negative at -$2.04b. The 5-day average is -$155m, worse than the 20-day average of -$102m and the 100-day average of -$105m.
• India: Recorded -$411m in outflows yesterday, bringing the 5-day total to -$841m. YTD outflows remain significant at -$9.26b. The 5-day average is -$168m, better than the 20-day average of -$365m but worse than the 100-day average of -$170m.
• Indonesia: Posted -$31m in outflows yesterday, bringing the 5-day total to -$233m. YTD flows are negative at -$462m. The 5-day average is -$47m, worse than the 20-day average of -$16m and the 100-day average of -$14m.
• 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, reducing 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 +$7m in inflows yesterday, bringing the 5-day total to +$28m. YTD flows remain negative at -$86m. The 5-day average is +$6m, better than the 20-day average of -$3m and the 100-day average of -$2m.

Table 1: EM Asia Equity Flows

In post-Tokyo trade, JGB futures closed with a downtick, -2 compared to settlement levels, after US tsys finished cheaper on Friday. 

• US tsys gapped richer after lower-than-expected jobs gains for January, and a small dip in the unemployment rate -- but quickly reversed on robust two-month net revisions along with a smaller-than-expected benchmark revision.
• Wage growth meanwhile also surprisingly accelerated but against a notable caveat of average weekly hours sliding to lows last seen in the depths of the pandemic and mid-2010.
• Fed rate cut expectations were trimmed to 37bp of cuts for 2025 vs 43bp pre-data.
• Headlines have crossed from Bloomberg, with US President Trump stating that the US will announce tariffs of 25% on all steel and aluminium imports from Monday.
• The meeting between Japan PM Ishiba and US President Trump from late last week will likely be seen as a success from a Japanese standpoint. The US leader doesn't appear to have Japan in his crosshairs from a trade standpoint at this stage, although does want to eliminate the trade deficit the US has with Japan. Ishiba spoke about raising Japan's imports of US LNG and boosting Japan's investment in the US.
• Today, the local calendar will see Current Account Balance, Bank Lending and Eco Watchers Survey.

• Friday’s moves was all about US data and key releases gave mixed messages about the US economy and the potential for rate rises.
• Non-farm payrolls were softer than expected at 143k (vs consensus 175k), but the University of Michigan’s inflation expectations survey (1 year forward) rose more than expected to +4.3% from +3.3% in January.
• Whilst the payrolls number may increase the potential for a rate cut, the inflation outlook dampens that outlook.
• Gold behaved accordingly having rallied hard just after payrolls, to giving that rally back to end virtually where it started the day.
• Opening at US$2,856.28, gold peaked at $2,886.78 only to surrender those gains to finish Friday’s trading session at $$2,861.07 and is set to open marginally higher in Asian trade.
• With tariff headlines coming from Trump on aluminum and steel and claims that Elon Musk has found ‘irregularities’ at treasury.
• Gold’s ascent through all key technical levels continued last week as bullion moved further away from the 20-day EMA of $2,784.43, pulling all major technicals higher in signs that the bullish momentum is likely to continue.
• The coming fortnight sees major gold producers report earnings, and likely to provide insight into gold’s outlook.
• Safe haven demand remains a key determinant of gold’s fortunes and as US data provides mixed results for the outlook for rates, the strength of the USD in the face of tariff threats remains a key factor that determines gold’s fortunes in the near term.