EM ASIA CREDIT: EM Asia - New Issue Statistics - Book Multiples (May)

The impact on headline inflation of the government’s electricity discount continued to unwind in April with the CPI rising 1.95% y/y from 1.0% y/y in March and -0.1% in February. Core remained at 2.5% y/y for the third consecutive month but well within Bank Indonesia’s (BI) 1.5-3.5% target corridor. Goldman Sachs continues to forecast BI will ease by a further 100bp by end-2025 if the rupiah will allow it. It sees a risk that rate cuts could continue to be delayed if the “IDR continues to underperform peer currencies”.

• GS said “Indonesia's headline CPI inflation increased to 2.0% yoy in April, returning to the central bank's inflation target band of 1.5-3.5% (vs. 1.0% yoy in March). Today's reading was above our and Bloomberg consensus expectations. On a seasonally adjusted, sequential basis, headline CPI slowed to 1.1% mom s.a. in April from 1.6% mom s.a. in the previous month.”
• “Housing and utilities inflation rebounded to 1.6% yoy in April (vs. -4.7% yoy in March) mainly from a normalization of electricity tariffs. This contributed 26bp towards the headline inflation in April, compared to -77bp the previous month.”
• “Core inflation, which excludes food and administered goods, was unchanged at 2.5% yoy in April as faster personal care inflation driven by high gold prices being offset by generally slower domestic goods and services inflation.”

Natural gas prices were higher last week supported by hopes that trade deals would be made with the US, especially China. US President Trump implied today that there could be some agreements announced this week. Europe rose 1.6% on Friday to EUR 32.65 off the intraday high of EUR 33.68 to be up 0.5% on the week. US prices were almost 19% stronger last week after rising 5.4% on Friday to $3.67. 

• Following a cold winter, the market was worried about Europe’s ability to refill and meet the 1 November 90% target. Now summer month contract prices are below next winter’s, which is encouraging purchases for inventories. Higher temperatures and increased LNG imports, as vessels are redirected away from Asia, have also helped the process considerably.
• North Asian LNG imports fell 10% y/y in April as demand has softened with warmer weather and China’s tariffs on shipments from the US as well as increasing its own production.
• Reuters reported that new sanctions on Russian resources and banking had been agreed by US officials but it remains unknown if Trump will approve them, according to Bloomberg. 

The BBDXY range on Friday night was 1219.15 - 1226.45, Asia is trading around 1221. The USD has failed miserably to hold onto its gains, as longs in USD/Asia are being forced to capitulate with another leg lower this morning.

• The USD has opened pretty weak in Asia once more as stocks give back some of their gains from Friday night and the move lower in USD/Asia accelerates.
• Deutsche Bank via BBG - “ Our medium term bearish dollar view has a lot to do with reallocation away from US asset overweights given policy changes.”
• On top of adding to his already large cash position instead of stocks Warren Buffet also said: “ There could be things that would happen in the US that would “make us want to own a lot of other currencies”.
• “ Economists at Goldman Sachs and Barclays pushed back their forecasts for the Fed to lower its benchmark to July, rather than June, after the data.”(per BBG)
• MNI Economist on FOMC Decision - “The FOMC will extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement. At the press conference, Chair Powell is likely to warn about the risks to both sides of the dual mandate. Don’t anticipate any meaningful changes in the Statement, though any signal that the Fed is looking seriously at “soft” survey data to assess the outlook could be significant.
• Resistance in the BBDXY is at 1230, the market failed here at the first go, the ISM services PMI will dictate price action tonight. Price action suggests we test the recent lows at some point.
• Data : ISM Services PMI

Fig 1: USD/TWD Weekly Chart

Source: MNI - Market News/Bloomberg