EM ASIA CREDIT: MNI EM Credit Market Wrap - Asia
** The main stories out of the region**
The U.S. treasury curve steepened into the Asia open and then for the most part traded side-wise. We are now closing 10yr yields c. 1bp wider at 4.6%. Asia EM govie/agency bonds were mostly unchanged. That said, in terms of outliers, Indonesia was 3bp wider. As expected (5.75%) rates were left unchanged by the Indian central bank. Thailand was -3bp tighter on the day, a day in which the Prime Minister asked for the central bank to cooperate on rate cuts.
In terms of newsflow, Baidu reported Q3 results that were weaker than consensus, overall negative for spreads. China released statistics on residential property price growth, and while it was negative 5.4% YoY in January, the decline is slowly reducing. Finally, Vedanta was reported to have gained approval from secured and unsecured creditors for the demerger.
In terms of supply, Mirae came with a $ 3yr benchmark with an IPT of T+125a, we had a fair value of T+90bp. We also saw a $ mandate from Indian toll project, Varanasi Aurangabad. The deal is expected to be a benchmark 9NC3.
Best & Worst Performers (zsprd, bp)
Source: Bloomberg
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BONDS: Non-committal Trade Thus Far
Skittish early Monday trade, with EGBs digesting familiar rhetoric from the hawkish wing of the ECB (Schnabel & Holzmann), while looking ahead to Trump’s inauguration.
- German & UK yields within 1bp of Friday’s close across the curve.
- The observance of the MLK holiday in the U.S. means that cash Tsys are closed until Asia hours.
FOREX: FX OPTION EXPIRY
Of note:
EURUSD 1.4bn at 1.0300/1.0325.
EURUSD 2.5bn at 1.0300/1.0325 (tue).
USDJPY 1.3bn at 156.00 (tue).
AUDUSD 1.69bn at 0.6210 (wed).
EURUSD 3.24bn at 1.0295/1.0320 (thu).
- EURUSD: 1.0300 (1.02bn), 1.0325 (475mln).
- AUDUSD: 0.6185 (550mln).
- NZDUSD: 0.5660 (329mln).
- USDZAR: 18.7000 (300mln).
GERMAN DATA: German PPI Rises in December, ex-Energy Broadly Unchanged
German PPI rose to 0.8%% Y/Y in December, up from November's +0.1% Y/Y, but remains lower than consensus expectations of +1.1% Y/Y. Sequentially, PPI fell -0.1% M/M (vs +0.3% cons; +0.5% prior).
- Consistent with German CPI in December, energy deflation was less prominent than before, at -0.2% Y/Y (vs -2.4% November). This is the highest Y/Y rate since May 2023.
- That leaves ex-energy PPI broadly unchanged vs November, at 1.2% Y/Y - the rate has been hovering around that level for five months now.
- Looking at the non-energy categories, a deceleration in intermediate goods inflation stands out the most, at +0.1% Y/Y vs +0.4% in November. This comes as the trend of an acceleration in the category started to stall in September, and should, on the margin, be a positive sign regarding contained mid-term core goods CPI inflation in Germany.
- For further details see table.
