EM ASIA CREDIT: Bright Food (Group): New euro deal priced

Natural gas prices rose strongly on Monday as temperatures rise and the market worries about global supplies. Commodities in general rallied yesterday.

• European gas rose 2.2% to EUR 34.99, close to the intraday high of EUR 35.49. Warmer weather in southern Europe which is forecast to spread across the region is expected to increase demand, although the May manufacturing PMI was lacklustre suggesting that industrial power usage is likely to remain soft. Refilling progress stays the focus.
• Seasonal maintenance in Norway continues but also the unplanned outage at the major Troll field has carried on into this week. The work on the Russian pipeline through Turkey has apparently been completed.
• An easing of sanctions on Russia is a long way off. Talks between the Ukraine and Russia in Istanbul finished unsuccessfully with Russia continuing to refuse an “unconditional” ceasefire. Ukraine expects a response to its proposals by the end of the month.
• Progress on US-Iran talks are being watched closely. There is always the risk that Iran blocks the Strait of Hormuz in protest which would impact Qatar’s LNG exports.
• US prices jumped 8.6% to $3.74, close to the day’s peak, on expectations of an increase in cooling demand following mild weather resulting in a lacklustre season to date. According to Atmospheric G2, the western US should see warmer weather at the start of next week, while temperatures should increase in the central and eastern areas thereafter. 

The AOFM sells A$1200mn of the 3.75% 21 April 2037 bond, #TB144:

• Average Yield (%): 4.3877 (prev. 4.3899)
• High Yield (%): 4.3900 (prev. 4.3900)
• Bid/Cover: 1.9750x (prev. 4.6400x)
• Allotted at Highest Accepted Yld as % of Bid at Yld (%): 84.1 (prev. 82.6)
• Bidders: 31 (prev. 40), successful 17 (prev. 9), allocated in full 11 (prev. 1)

US stocks continue to find demand for now on dips, the S&P looks to be building for another test of 6000. The JPY is getting sold early in the Asian session as we head into the Japanese fix. US futures open down this morning in Asia paring back some of their overnight gains.

• EUR/JPY - Overnight range 162.84 - 163.42, Asia is trading around 163.35. EUR/JPY continues to be capped on any move back towards 165.00. Looks like a 161 - 165 range for now.
• GBP/JPY - Overnight range 193.01 - 193.90, Asia trades around 193.45. Last week saw the move higher capped above 196.00 again. A sustained break sub 191.50 is needed to turn the focus back to the lows, until then it looks to be a 192.00 - 196.00 range.
• NZD/JPY - Overnight range 85.80 - 86.24, Asia is currently dealing 86.40. The pair is attempting to push higher this morning but continues trading sideways in a 84.00 - 87.50 range for now. No clear direction but there is an inclination for the market to want to express a long JPY.

• CNH/JPY - Overnight range 19.7669 - 19.8768, Asia is currently trading around 19.8000. CNY/JPY doesn’t seem to like it back above 20.00, can it begin to build for a move lower again, a move back below 19.7000 would turn the focus back towards 19.00. Expect sellers on the day back towards 20.0000.

  Fig 1 : CNH/JPY Hourly Chart

  

  Source: MNI - Market News/Bloomberg