US: Modi’s Visit: Trade Imbalances in Focus.
Feb-14 00:56
- As the press conference concludes between Trump and Modi’s meetings, some key takeaways have come from the meeting.
- The key areas they have agreed of further opportunities are energy and infrastructure, artificial intelligence and semi-conductors, rare earth mining and the pharmaceutical sector.
- As the leader of one of the world’s largest economies, Mr. Modi’s visit, in the midst of President Trump threatening tariffs, was dominated by the issue.
- President Trump saying openly that “India has the highest level of tariffs of any of the US trading partners.” Going on to note “I had discussions with India in the first term about the fact that their tariffs were very high, and I was unable to get a concession,” Trump adding, “ So we’re just going to do it the easy way. And we’re just going to say: ‘Whatever you charge, we charge.'”
- During the press conference Trump then said that he welcomes a recent decision by India to reduce tariffs, as a start.
- The President then spoke to the trade deficit that the US has with India and that the talks were the start of more, aimed at strengthening the trade alliance and balancing it more in the US's favour.
- In that context the President indicated that military ties with India are to be strengthened via the increase of military sales.
- The focus on the value of the trade deficit should be a warning to other countries in Asia where significant imbalances rest.
- India generally runs a trade deficit whilst several of its key regional peers run huge surpluses, risking the ire of President Trump.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGBS: Cash Bonds Slightly Mixed, Fresh 10YY Cycle High
Jan-15 00:55
In Tokyo morning trade, JGB futures are stronger, +9 compared to settlement levels.
- M2 & M3 Money Stock 1.3% y/y and 0.8% y/y respectively in December. Today, the local calendar will also see Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session. Focus turns to today’s CPI inflation data for December where rental inflation is expected to accelerate to an average figure that firmly rounds to 0.3% M/M in December.
- BoJ Deputy Governor Himino’s speech on Tuesday is another sign that the policy board’s balance is now tilting toward another 25bp rate hike when they meet on Jan. 23-24.
- Himino shared his views on two factors – the momentum of domestic wage growth and US President-elect Donald Trump’s policies. In December, Governor Kazuo Ueda flagged these as key to watch before the BoJ moves toward another rate hike. (per BBG)
- Cash JGBs are mixed across benchmarks, but the swings are bounded by +/- 1bp. The benchmark 10-year yield is 0.7bp lower at 1.24% after making a fresh cycle high of 1.245% today.
- The swaps curve has twist-steepened, pivoting at the 20-year, with rates 2bps lower to 3bps higher.
US TSYS: Tsys Yields Open Lower In Asian Trading
Jan-15 00:46
- Cash tsys yields have opened flat to 1bps lower in Asia this morning, the curve has seen a slight flattening, with the 2s10s -0.5bps at 41.529. The 2yr is -0.4bps at 4.363%, the 10yr is -1bps at 4.783% after briefly trading above 4.80% overnight.
- Projected rate cuts through mid-2025 continue to retreat, current vs. late Friday levels* as follows: Jan'25 steady at -0.7bp, Mar'25 at -4.9bp (-4.9bp), May'25 -9.7bp (-9bp), Jun'25 -17.4bp (-16.5bp), Jul'25 at -20.7bp (-18.7bp).
AUSSIE BONDS: ACGB Dec-34 Supply Well Absorbed
Jan-15 00:15
Expectations of strong pricing at auctions were confirmed, with the latest ACGB Dec-34 supply achieving a weighted average yield that printed 0.70bp through prevailing mids (per Yieldbroker). The cover ratio also improved, rising to 2.8875x from 2.8375x.
- As highlighted in our auction preview, several factors likely supported today’s strong demand: a higher outright yield; a steeper curve; and the bond's inclusion in the XM basket.
- The deterioration in sentiment towards global bonds over recent months, however, likely weighed.
- The ACGB Dec-34 cash line and the XM futures contract are little changed in post-auction dealings.
