EM ASIA CREDIT: Bangkok Bank: Results, better than consensus

The BBDXY range overnight was 1201.66 - 1209.66, Asia is currently trading around 1209. The window for a peaceful resolution in the middle east seems to be closing and with the US potentially now getting involved, the USD is finally looking to bounce. The USD has been able to ignore the multitude of reasons for it to bounce, but with the pressure on risk mounting and the market positioned very short USD the probabilities of some sort of a retracement is increasing. We have seen this movie before though, is it different this time ?

• Bloomberg - “Israel-Iran situation “has demonstrated that the USD still retains a bit of haven status in certain situations, such as when the War is seen to raise the risk of disrupting global oil supply, and when the war diverts traders’ attention away from those risks that are US centric, including, of course, tariff risk, and the US’s fiscal uncertainties,” wrote Thierry Wizman, a macro strategist at Macquarie Group in New York. “But we wouldn’t stretch this to say, however, that foreign traders have found renewed confidence in the US and its political economy,” he said.”
• ZeroHedge on X: "Biggest Pain Trade Is Long The US Dollar": Latest Fund Manager Survey Finds "Everyone Is Short The Buck”. See Graph Below.
• The BBDXY has bounced strongly off its 1200 support area, it is still in a clear downtrend but with positioning at extreme levels and headwinds increasing the potential for some sort of a retracement is increasing.
• The BBDXY rejected the 1225 area pretty strongly, the USD should continue to be met with supply towards the 1225/30 area, only a sustained break above here would start to get the bears a little worried. 
• There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows. This will also result in some decent short squeezes as a lot of the market is positioned the same way. 

• Data/Events : Data/Events: MBA Mortgage Applications, Housing starts, Initial Jobless Claims, FOMC

  Fig 1: Investor USD Position

  

  Source: @zerohedge/BofA Research

Today’s auction showed solid pricing for ACGBs, with the weighted average yield coming in 0.37bps below prevailing mid-yields, according to Yieldbroker. Moreover, the cover ratio jumped to 3.4444x from 2.75x at the previous auction. 

• As noted in our preview, the current yield for this bond was approximately the same as the previous auction, notably about 50bps below the high recorded in early November 2024.
• The 3/10 yield curve was also around the same level as the previous auction but sits around 20bps below its recent high.
• Following the auction, both the cash line and XM remained relatively unchanged.

Government officials cannot host illegal banqueting under the excuse of revitalising the economy, the People’s Daily said in a commentary. Rules banning illegal eating and drinking are to prevent corruption and allow the economy to develop better, the paper said. Normal catering practices are the pulse of the economy with revenue exceeding CNY5.5 trillion in 2024 and supporting more than 30 million jobs, the paper added. Non-compliant dinners are eroding public trust and must be eradicated with a zero tolerance attitude.