MALAYSIA: Country Wrap: Exports Decline for First Time in 8 Months

Germany, Spain and France are still due to hold auctions this week. The EFSF held a syndication on Monday while Slovakia, the EU , Germany and Finland held auctions already this week. We pencil in estimated gross issuance for the week of E36.8bln, up from E34.3bln last week.

For the full document with a recap of issuance so far this week and a look ahead to the rest of this week's and next week's issuance, click here.

• Today, Germany will come to the market to sell E4bln of the 10-year 2.50% Feb-35 Bund (ISIN: DE000BU2Z049).
• Spain will hold a Bono/Obli auction tomorrow, with a combined E5.5-6.5bln of the 5.15% Oct-28 Obli (ISIN: ES00000124C5), the 3.10% Jul-31 Obli (ISIN: ES0000012N43, that line was as expected in particular), and the 1.00% Jul-42 Green Obli (ISIN: ES0000012J07) on offer.
• France will then hold a MT OAT auction, also tomorrow with a combined E10.5-12.5bln on offer of the on-the-run 3-year 2.40% Sep-28 OAT (ISIN: FR001400XLW2), the on-the-run 2.70% Feb-31 OAT (ISIN: FR001400Z2L7) and the 0% May-32 OAT (ISIN: FR0014007L00).
• France will conclude issuance for the week with an OATei auction later tomorrow for a combined E1.5-2.0bln. On offer will be the 0.10% Jul-31 OATei (ISIN: FR0014001N38), the 3.15% Jul-32 OATei (ISIN: FR0000188799), the 1.80% Jul-40 OATei (ISIN: FR0010447367) and the 0.10% Jul-53 OATei (ISIN: FR0014008181).
• Note that Greece has announced it will not hold its GGB auction that had been scheduled for today.

Portugal and the EU are still due to sell bills this week, while Germany, the Netherlands, France and the ESM have already come to the market. We expect issuance to be E19.8bln in first-round operations, up from E18.1bln last week. 

• This morning, Portugal will come to the market with a combined E1.25-1.50bln of the 6-month Nov 21, 2025 BT and the new 12-month May 22, 2026 BT.
• Finally today, the EU will look to issue up to E1.0bln of the 3-month Aug 8, 2025 EU-bill, up to E1.0bln of the 6-month Nov 7, 2025 EU-bill and up to E1.0bln of the 12-month May 8, 2026 EU-bill.

• Ministry of Finance data shows the Chinese government deficit tipped CNY2.6tn in the year to April.   This deficit is one of the largest on record and represented a 50% increase year on year.   The government is looking to cushion the economy as it is buffeted by the impacts of the trade war.   Total expenditure rose 7.2 per cent to CNY12 trillion yuan, the data showed.   In signs the economy may be stabilizing, tax revenue rose 1.9% from a year earlier after a 2.2% decline in March.  Signs that the wave of government bond issuance are impacting the fiscal position were evident as interest payments rose 11%. With signs that the US China relationship is thawing and this release could represent the low point in the deficit as signs that economic activity is stabilizing.  (source MNI Market News)
• The US Commerce Department set the stage for anti-subsidy duties on imports of key battery components from China, after concluding materials had been unfairly subsidized.  The agency’s preliminary determination is an early milestone in a trade case looking at supplies of active anode material, which is vital for electric vehicle batteries, and includes materials such as graphite and silicon.   (source BBG)
• China's major bourses were all positive today with the CSI 300 leading the way, up +0.68%, the Hang Seng up +0.53%, Shanghai up +0.38% and Shenzhen up a mere +0.09%.
• Yuan Reference Rate at 7.1937 Per USD; Estimate 7.2181
• CGBs are steady to a little softer with the 10YR at 1.67%