EM ASIA CREDIT: Emerging Markets: IMF Update

President Trump made some statements that have been garnering some attention regarding Issuance as a result of what he states is a Fed that is behind the curve and should be cutting. President Trump said he had “ instructed my people not to do any debt beyond nine months or so.” Below are some viewpoints relating to this:

• Jim Bianco on X: “Trump said he was going to refinance the $9 trillion as short-term debt because "we have a stupid person" at the Federal Reserve. The president explained his desire for the Federal Reserve to lower interest rates so the U.S. does not have to pay for 10 years of debt at a higher rate.
• "Then we’re gonna get somebody into the Fed who’s going to be able to lower [the rates]," Trump said, noting the rates should be at 1 or 2%. "You know, if you look at Switzerland, they’re the lowest right now. They’re at much less than one point, and frankly, we should be there, too, because… without the United States, the whole world doesn’t work.
• “So is Bessent going to pile massive borrowing into the T-Bill market? Then Trump will appoint someone who will cut rates, allowing them to refinance at lower rates.”
• Andreas Steno Larsen on X: “Trump: “I don’t want to pay for 10-year debt at a higher rate.” If that’s not an obvious debasement trade, what is?”
• Andy Constan on X: “Just to be clear, this "instruction" resulting in the cancellation of 3.3TN in coupon auctions over 9 months would be an annual pace of 4.4TN of QE or double the monthly pace of any QE in history.”
• “Without coupon supply those that need to own coupons have two choices. Buy bills and earn zero or negative risk premium over cash or buy coupon adjacent securities. Asset inflation and eventually goods inflation results from starving coupon buyer demand.”

At the Tokyo lunch break, JGB futures are weaker, -15 compared to the settlement levels.

• (Bloomberg) -- Japan is continuing to “actively” pursue a tariff agreement with the US that benefits both countries, while protecting its own national interest, Deputy Chief Cabinet Secretary Kazuhiko Aoki says in a press conference Monday.
• “US President Donald Trump characterized trade in cars between the US and Japan as unfair and floated the idea of keeping 25% tariffs on autos in place.” (BBG)
• Japan's factory output rose 0.5% in May, missing analysts' estimates of a 3.5% gain, as US tariffs hit the nation's exports.
• Cash US tsys are slightly mixed, with a steepening, in today's Asia-Pac session after Friday's modest losses.
• Cash JGBs are flat to 2bps cheaper across benchmarks, with the 20-30-year bucket underperforming. The benchmark 10-year yield is 0.8bp higher at 1.446% ahead of tomorrow’s supply.
• Swap rates are 1-2bps higher.

• China's key bond futures fell this morning yet remain on track to finish higher for the month.  
• The 10YR future is down -0.12 at 108.95, trading through the 20-day EMA of 108.98.  Next key level below is the 50-day EMA of 108.87.
• The 2YR future is down -0.03 at 102.51 and is testing the 50-day EMA of 102.50
• China's 10YR government bond has remained incredibly resilient in June, trading in a 3bps range of 1.64-1.67 and is today at 1.65%