EM ASIA CREDIT: Vedanta (VEDLN, B2/B/B+) - demerger approval confirmed

• Tsys futures are trading near session's best levels now, brushing off earlier weakness following headlines around 25% tariffs on Canada & Mexico. TY is trading +15+ at 109-01, Resistance is seen at 109-06 (Dec 31 high) but gains are deemed corrective from a technical perspective, against a medium-term bear trend with support at 108-00 (Jan 16 low).
• Cash tsys curve has twist flattened, with the belly out-performing, the 7yr leads the way trading -9.5bps to 4.439% just off the ytd lows of 4.413%, while the 10yr is -8.7bps at 4.540%
• Long-end bonds have outperformed recently, flattening yield curves as markets downplayed Donald Trump's tariff threats against Canada and Mexico. The 2s10s spread fell to 31bps, its tightest level since January 3, with technical resistance and charting suggesting a double top may have formed at 42bps, which could limit further steepening for now. 

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Former RBA officials share their outlook for 2025 cuts. On MNI Policy MainWire now, for more details please contact sales@marketnews.com. 

Asian markets experienced significant fluctuations Tuesday following U.S. President Donald Trump's warnings of 25% tariffs on Canada and Mexico by February 1, which dented earlier optimism about a gradual trade policy approach. South Korean stocks turned lower as Trump ordered a review of global trade practices, with battery and chemical shares plunging, though chipmakers saw gains. In China, markets briefly pared gains before recovering, supported by hopes that China may avoid immediate tariff measures, although the offshore yuan weakened.

• South Korean stocks fell after initially opening higher, with the KOSPI losing 0.37% by late morning as Trump’s trade policy review rattled sentiment. Battery and chemical shares were among the biggest losers, with LG Energy Solution dropping 5.4% and POSCO Future M plunging 10%. However, chipmakers like SK hynix and Hanmi Semiconductor gained 1.4% and 2.22%, respectively, helping limit broader losses.
• Taiwans TAIEX is little changed today, as TSMC and Hon Hai trades unchanged to 0.20% higher.
• Japanese equities erased early gains as Trump’s tariff threats on Canada and Mexico dashed hopes for a moderate trade policy. Benchmark indices the TOPIX & Nikkei are now trading mixed although wrapped around unchanged for the day. Export-reliant carmakers were among the hardest hit, with Mazda Motor dropping 2.6%, as investors priced in potential risks to U.S.-bound exports.
• Australian equities saw swings with the wider market however are trading 0.50% higher now, led by gains in Financials.
• Trump’s tariff threats on Canada and Mexico weighed heavily on Asian sentiment. The Canadian dollar and Mexican peso tumbled as much as 1.4% and 0.9%, respectively, dragging down global risk appetite and reinforcing concerns about escalating trade tensions.