ASIA RATES: China Yields Higher After CPI/PPI, BoK Governor Comments Signal Easing Later In The Year
Jun-12 2024 05:45
Asian government bonds are showing mixed performance, with China's government yields slightly higher and South Korea's sovereign bond curve seeing gains.
- China government bonds are dealing flat to 1bp cheaper after today’s May CPI/PPI data.
- China May inflation data was close to expectations, with the Headline CPI rising 0.3% y/y against a 0.4% forecast and 0.3% in April. Core inflation (ex-food and energy) was 0.6% y/y, down slightly from April's 0.7% pace. The trend remains benign, albeit up from recent lows. The global commodity price backdrop is also helping.
- The PPI was -1.4% y/y against a -1.5% forecast and -2.5% prior.
- South Korean sovereign bond curve has shifted richer, with yields flat to 2bps lower, after annual jobs growth (+80k) fell to its slowest pace since early 2021.
- South Korea's May unemployment rate held steady at 2.8%, which was in line with the consensus forecast and the prior April outcome.
- South Korean sovereign bonds were also supported by comments from BoK Governor Rhee Chang-Yong, who called for a balanced approach in considering the timing of a policy pivot (per BBG). This was interpreted as another sign that the central bank is moving toward easing its restrictive policy later this year as inflation continues to cool. (See link)
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EUROZONE T-BILL ISSUANCE: W/C May 13, 2024
May-13 2024 05:41
Germany, France, Spain, Finland and Portugal are due to sell bills this week. We expect issuance to be E15.7bln in first round operations, down from E30.8bln last week.
- This morning, Germany will look to issue E3bln of the new 12-month May 14, 2025 bubill.
- This afternoon, France will look to issue up to E7.1bln of the 13/26/49-week BTFs: E3.2-3.6bln of the new 13-week Aug 14, 2024 BTF, E1.5-1.9bln of the 26-week Nov 14, 2024 BTF and E1.2-1.6bln of the 49-week Apr 24, 2025 BTF.
- Tomorrow morning, Spain will look to sell the 3-month Aug 9, 2024 letras and the 9-month Feb 5, 2025 letras, with amounts to be confirmed on Monday.
- Also tomorrow, Finland will look to come to the market with up to a combined E2bln of the 6-month Nov 13, 2024 RFTB and the 9-month Feb 13, 2025 RFTB.
- Finally on Wednesday, Portugal will look to sell a combined E1.25-1.50bln of the new 6-month Nov 22, 2024 BT and the new 12-month May 16, 2025 BT.
For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.
ASIA STOCKS: Regional Asian Equities Lower, AU Federal Budget Tomorrow
May-13 2024 05:28
Asian equity markets are mixed today, Taiwan equities are the top performing market led by the semiconductor sector. There isn't much on the data calendar today, earlier we have NZ Food prices which increased from the month prior and Australia's NAB business survey's which show business conditions had fallen from the month prior.
- Japanese equities are little changed today, the real estate sector is the worst performing. There has been little in the way of headlines out of the region, with government officials staying surprising quiet on the currency so far today, the yen continued to slip on Friday and we currently trade little changed on the day at 155.75. The Nikkei 225 is up 4.10% from the lows on Apr 19th but has failed to break back above the 20 & 50-day EMAs and trades down 0.32%, the Topix has performed slightly better over the same period up 5% and holds above all moving averages, however trades down 0.30%
- South Korean equities are lower today, earlier April household spending rose to KRW1,103.6T from KR1098.5t in March. The Kospi continues to comfortably hold above all major moving averages, while the RSI is holding above 50 and MACD indicator is holding steady, signaling buyers still remain in control, the index is down 0.43% today.
- Taiwan equities are the top performers today, flows turned positive again on Friday as investors continue buying up semiconductor stocks. It's a very quiet week on the data front for Taiwan with nothing scheduled. The Taiex opened at new all-time highs this morning, however we trade just off those levels now, up 0.67%.
- Australian equities are lower today, as investors await the federal budget that will be released on Tuesday, while earlier NAB's monthly business survey's showed that conditions eased in April, with trading, profitability and employment all back around their long-term averages. The ASX200 is down 0.18%.
- Elsewhere in SEA, New Zealand equities are down 0.88% with the 1yr inflation expectation falling to 2.73% from 3.22% and the 2yr falling to 2.33% from 2.50%, Indonesian equities have returned from their break and are unchanged for the day, Philippines equities are up 1.21%, Malaysian equities up 0.18% and Indian are down 1%
LOOK AHEAD: UK Timeline of Key Events (Times BST)
May-13 2024 05:23
| Date | UK | Period | Event |
| 14-May | 0700 | Mar/Apr | Labour Market Survey |
| 14-May | 0830 | BOE's Pill Speech at Chartered Accountants Summit | |
| 15-May | 1505 | Bernanke Review of Bank of England Forecasting | |
| 16-May | 1200 | BOE's Greene Speech at Make UK on Labour Market | |
| 17-May | 0900 | BOE's Mann Speech at Economics Statistics Conference | |
| 20-May | 1000 | BOE's Broadbent Monetary Mechanism Workshop | |
| 21-May | 1100 | May | CBI Industrial Trends |
| 21-May | - | DMO quarterly consultation investors/GEMM consultation | |
| 21-May | 1800 | BOE's Bailey Lecture at LSE | |
| 22-May | 0001 | Apr | Brightmine pay deals for whole economy |
| 22-May | 0700 | Apr | Consumer inflation report/ Producer Prices |
| 22-May | 0700 | Apr | Public Sector Finances |
| 22-May | 1345 | BOE's Breeden Panellist on macroprudential policies | |
| 23-May | 0930 | May | S&P Global Flash PMI |
| 24-May | 0001 | May | Gfk Monthly Consumer Confidence |
| 24-May | 0700 | Apr | Retail Sales |
| 28-May | 0001 | May | BRC Monthly Shop Price Index |
| 28-May | 1100 | May | CBI Distributive Trades |
