EM ASIA CREDIT: Thai plans to reduce surplus with U.S. challenging
PTTEP Treasury Center (PTTEPT, Baa1/NR/BBB+)
"*THAILAND CAN RAISE US FARM IMPORTS TO REDUCE TRADE SURPLUS"
- The Thai Chamber of Commerce earlier stated that the country can raise imports of farm products, such as corn, soybean and fish. We note that corn and soybean are not traditional staple foods. Therefore the impact on the trade deficit likely limited.
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US TSYS: Tsys Futures Slightly Lower As China Tariff Deadline Nears
- Tsys futures edge lower as the deadline on the China tariffs near while Trump has agreed to delay 25% tariffs on Mexico & Canada. TU is unchanged at 102-24 1/4, while TY is -04+ at 108-26
- Earlier there was a block 2s10s flattener with a DV01 $245k, however little else in the way of notable flows
- Cash tsys yields are slightly higher today, curve has continued to flatten. The 2yr is +1.5bps at 4.264%, while the 10yr is +1.2bps 4.567%. The 2s10s is -0.5bps at 30bps.
- Projected rate cuts through mid-2025 have cooled slightly vs this Monday levels (*) as follows: Mar'25 at -3.5bp (-3.7bp), May'25 at -9.8bp (-10.3bp), Jun'25 at -19.2bp (-19.7), Jul'25 at -24.4bp (-24.9bp).
- Today we have Factory Orders & Durable Goods Orders while the Fed's Mary Daly will speak
ASIA STOCKS: Asian Equities Surge On Tariff Pause
Asian equities rebounded sharply as US President Donald Trump delayed tariffs on Mexico and Canada, fueling hopes of a potential reprieve for China. Hong Kong stocks surged, with the Hang Seng China Enterprises Index jumping nearly 4% before paring gains, its biggest move since October, as markets anticipated trade talks between Trump and Xi. Japan’s Nikkei 225 rose 1.6%, led by auto and electronics stocks, while South Korea’s Kospi climbed 1.6%. Australia’s ASX 200 edged up 0.13%, supported by gains in tech and mining stocks, with gold miners benefiting from record-high gold prices.
AUSSIE BONDS: Cheaper With US Tsys, New Mar-36 Bond To Be Priced Tomorrow
ACGBs (YM -4.0 & XM -5.5) are cheaper after dealing in relatively narrow ranges on a second-tier data day.
- Outside of the previously outlined household spending and ANZ-Roy Morgan Consumer Confidence, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s modest sell-off following news that President Trump agreed to delay a 25% tariff on Mexico and Canada.
- Cash ACGBs are 5bps cheaper with the AU-US 10-year yield differential at -14bps.
- Swap rates are 4-5bps higher.
- The bills strip has bear-steepened with pricing -1 to -6.
- RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (136%), with the probability of a February cut at 91% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar will see S&P Global Composite & Services PMIs.
- The AOFM announced the issue by syndication of a new 4.25% 21 March 2036 Treasury Bond. The issue will be of a benchmark size. Initial price guidance is a spread of 2 to 5bps to XMH5. The issue is expected to be priced tomorrow.
