EM ASIA CREDIT: Thai plans to reduce surplus with U.S. challenging

• 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

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.

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.