THAILAND: CPI Undershoots, Challenges BoT's View of 'No Deflationary Spiral'
Feb-05 03:58
- Thai CPI fell -0.66% year-on-year, below market expectations of -0.35%, and prior month of -0.28% as commodity price declines impact.
- Core CPI was up +0.60% YoY in line with December with rice's price declines starting to fade.
- It's questionable whether the CPI declines predicates further monetary policy action.
- The BoT has limited room to cut rates further with rates as low as they are.
- The generally soft inflation backdrop is partly reflective of weak underlying domestic demand. The authorities are mindful of cutting rates further, particularly as broader global growth conditions don't warrant such action. With rates at 1.25%, there is limited policy flexibility and with the government in turmoil again and ahead of this weekend's election, markets will be hoping for a clearer outcome that could forge policy support.
- The BoT meets next on February 2025. By then hopefully a government will have formed and some indication on the direction of fiscal policy.
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JGBS AUCTION: Weakish Auction Result For 10Y
Jan-06 03:49
The 10-year JGB auction delivered weakish results, with the low price failing to meet expectations at 100.00, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.3037x from 3.5913x and the tail lengthened to 0.05 from 0.04.
- This performance came despite an outright yield at a fresh cycle high, around 25bps higher than the level of last month's auction.
- The 2s/10s yield curve had steepened further since last month’s auction and sat at around the cycle high.
- That said, BOJ Governor Kazuo Ueda’s hawkish comments yesterday may have impacted today result at the margin.
- In early afternoon Tokyo trading, the cash 10-year and JGB futures are dealing modestly cheaper.
Bloomberg Finance LP
JGBS AUCTION: 10-Year JGB Auction Results
Jan-06 03:41
The Japanese Ministry of Finance (MoF) sells Y1,958.5bn 10-Year JGBs:
- Average Yield: 2.095% (prev. 1.872%)
- Average Price: 100.04 (prev. 98.57)
- High Yield: 2.101% (prev. 1.877%)
- Low price: 99.99 (prev. 98.53)
- % Allotted At High Yield: 90.6569% (prev. 21.1502%)
- Bid/Cover: 3.3037x (prev. 3.5913x)
CHINA: Bonds Lower as Liquidity Removal Continues
Jan-06 03:35
- With the PBOC withdrawing liquidity again this morning during the OMO, the year to date withdrawal has topped CNY1tn already.
- Bonds are weak today post the OMO as all major equity bourses rally.
- The 10-Yr future is down -0.135 to 107.70, slipping further below all major moving averages.
- The 2-Yr future is down -0.04 to 102.37, also retreating further below all major moving averages.
- Cash is steady with the 2-Yr at 1.377% and the 10-Yr up +1.5bps at 1.87%, it's highest over the last month.
- As of Dec. 31, regional government issuers had disclosed plans to issue over 2.1 trillion yuan of local bonds in the first quarter as regional authorities move to support major construction projects, Shanghai Securities News reported (per BBG) with strong issuance kicking off this week.
- An expectation of fiscally proactive policies and focus on infrastructure to support growth will see key support coming from the Central Government for the regions to expedite their issuance needs.
