STIR: $-Bloc Markets Muted Over the Past Week, Except For Canada
In the $-bloc, rate expectations through December 2025 showed muted movements over the past week, outside of Canada, where pricing softened by 11bps. The US saw pricing firm 5bps, while Australia and New Zealand saw 5bp softenings.
- In Canada, the BoC cut at the seventh consecutive meeting in March, by 25bp to an overnight rate target of 2.75%, in line with analyst consensus and market pricing.
- The easing since June brings rates to what Governor Macklem characterized as the middle of the “neutral” range, putting policy in a finely poised position with the escalating trade war between Canada and the US looming large over the economic outlook. Overall, the press conference leaned marginally hawkish, as Macklem was if anything more emphatic on the need to keep inflation/inflation expectations under control.
- The US saw lower-than-expected prints for CPI and PPI but its ability to impart a positive influence on the market was overshadowed by ongoing trade war uncertainty.
- Looking ahead to December 2025, the projected official rates and cumulative easing across the $-bloc are as follows: US (FOMC): 3.62%, -71bps; Canada (BOC): 2.29%, -46bps; Australia (RBA): 3.41%, -69bps; and New Zealand (RBNZ): 2.99%, -76bps.
Figure 1: $-Bloc STIR (%)
Source: MNI – Market News / Bloomberg
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ASIA STOCKS: Equity Flows Muted On Tuesday, India Continues To See Selling
Muted flows on Tuesday, with small inflows into most regions, however India continues to see outflows with a total outflow ytd of $9.5b.
- South Korea: Recorded +$84m in inflows yesterday, bringing the 5-day total to -$40m. YTD flows remain negative at -$1.40b. The 5-day average is -$8m, better than the 20-day average of -$87m but worse than the 100-day average of -$137m.
- Taiwan: Posted +$186m in inflows yesterday, bringing the 5-day total to +$1.39b. YTD flows remain negative at -$2.49b. The 5-day average is +$279m, better than the 20-day average of -$95m and the 100-day average of -$71m.
- India: Recorded -$262m in outflows yesterday, bringing the 5-day total to -$740m. YTD outflows remain significant at -$9.58b. The 5-day average is -$148m, better than the 20-day average of -$348m but worse than the 100-day average of -$186m.
- Indonesia: Posted -$29m in outflows yesterday, bringing the 5-day total to -$290m. YTD flows are negative at -$547m. The 5-day average is -$58m, worse than the 20-day average of -$19m and the 100-day average of -$15m.
- Thailand: Saw +$30m in inflows yesterday, bringing the 5-day total to +$74m. YTD flows remain negative at -$256m. The 5-day average is +$15m, better than the 20-day average of -$10m and the 100-day average of -$16m.
- Malaysia: Registered +$21m in inflows yesterday, bringing the 5-day total to -$38m. YTD flows are negative at -$740m. The 5-day average is -$8m, better than the 20-day average of -$33m but worse than the 100-day average of -$26m.
- Philippines: Recorded -$11m in outflows yesterday, bringing the 5-day total to -$3m. YTD flows remain negative at -$104m. The 5-day average is -$1m, in line with the 20-day average of -$3m and the 100-day average of -$3m.
Table 1: EM Asia Equity Flows
AUSSIE BONDS: Solid Digestion Of May-41 Supply
The latest ACGB May-41 supply auction continued the recent trend of firm pricing, with the weighted average yield printing 0.22bps through prevailing mids (per Yieldbroker).
- The cover ratio increased to a robust 3.7875x, reflecting solid demand.
- Today's auction was likely bolstered by steeper 3/10 and 10/20 yield curves and the recent improvement in sentiment toward longer-dated global bonds.
- In early post-auction trading, XM futures and the bond line have shown little movement.
JPY: USD/JPY Pressing Higher, Close To 153.00, Ueda In Parliament Soon
USD/JPY is continuing to recover, the pair last near 152.90, near session highs and up 0.30% versus end NY close levels from Tuesday trade. Japan markets return today after yesterday's public holiday, so there could be some focus on the Tokyo fix, as last week USD/JPY tracked lower in the lead up to the fixing. Other G10 movements are close to unchanged at this stage.
- For USD/JPY technicals, we are testing the Feb 6 highs of 152.89. Note the Jan 27 low of 153.72 is a further potential upside target. The 50-day EMA is back at 154.70. Note as well some option expiries today (for NY cut later), Y153.00-15($884mln), Y153.50-70($1.7bln), which could influence spot.
- The firmer core yield backdrop is aiding the USD/JPY rebound, weakness in yen against crosses. US-JP yield differentials have ticked up from recent lows, the 10spread more so than the 2yr. The 10yr was last +321bps, against recent lows of +313bps.
- BoJ Governor Ueda will appear in parliament at 10:05am local time, so in just under an hour.
