MALAYSIA: GDP Up, Exports Very Weak

The TYU5 range has been 110-23+ to 110.30 during the Asia-Pacific session. It last changed hands at 110-25, down 0-02 from the previous close.

• The US 2-year yield is unchanged; it is trading around 3.95%.
• The US 10-year yield edged higher, it is trading around 4.40%, up 0.01 from its close.
• MNI FED: FOMC Meeting Expectations: Patience Mostly Seen In New Projections. We expect that the June meeting communications will reflect an increasingly patient attitude since May and certainly since March’s projections
• (Bloomberg) -- “The report on possible easing of the US bank capital rule has so far seen muted market reaction in part because it falls short of expectations, according to National Australia Bank. “A general reduction in capital requirements is a lesser deal than a Treasury exemption,” says Ken Crompton, head of rates strategy at the Australian bank. The general lowering of the ratio is still theoretically supportive for Treasuries’ demand, but not as much as an exemption would be, says Crompton.”
• The 10-year yield bounced strongly off its 4.30/35% support, this area needs to hold if yields are to move higher. The range looks to be 4.30% - 4.60% for now a break either side would provide a clearer direction. Lots for the market to digest as things heat up in the middle east and we approach the FOMC.
• Data/Events: MBA Mortgage Applications, Housing starts, Initial Jobless Claims, FOMC

EXECUTIVE SUMMARY

• The BoJ decided to keep its policy rate unchanged at 0.50%, a move fully expected by markets and consensus economists. The decision was made by a unanimous 9-0 vote from the Monetary Policy Committee (MPC).
• The primary focus of the meeting was the pace of quantitative tightening (QT) beyond the near term. From the second quarter of 2026 through the first quarter of 2027, it will slow that pace to ¥200 billion per quarter, a decision backed by an 8-1 vote.
• The BoJ’s policy statement maintained its existing economic and inflation outlook, aside from technical changes to incorporate recent higher inflation prints.
• Importantly, Ueda stated that the BoJ may consider raising interest rates without needing to see clear-cut new signs of rising inflation, should the economic outlook and forecast trajectory warrant such action.
• Overall, the BoJ continues to signal a gradual, data-dependent approach to policy normalisation, balancing market stability, inflation developments, and global uncertainties as it proceeds with cautious tapering into 2026 and beyond.
• Full review here

After a strong period of inflows, recent days have seen outflows beginning whilst Taiwan enjoyed a sizeable inflow yesterday. 

• South Korea: Recorded outflows of -$59m yesterday, bringing the 5-day total to +$286m. 2025 to date flows are -$7,987. The 5-day average is +$57m, the 20-day average is +$169m and the 100-day average of -$80m.
• Taiwan: Had inflows of +$298m as of yesterday, with total inflows of +$1107 m over the past 5 days. YTD flows are negative at -$10,104. The 5-day average is +$203m, the 20-day average of +$74m and the 100-day average of -$95m.
• India: Had outflows of -$308m as of the 16th, with total outflows of -$390m over the past 5 days.  YTD flows are negative -$10,928m.  The 5-day average is -$78m, the 20-day average of -$91m and the 100-day average of -$83m.
• Indonesia: Had inflows of +$16m yesterday, with total inflows of +$24m over the prior five days.  YTD flows are negative -$2,927m.  The 5-day average is +$5m, the 20-day average +$8m and the 100-day average -$29m.
• Thailand: Recorded outflows of -$19m as of yesterday, with outflows totaling -$147m over the past 5 days. YTD flows are negative at -$2,275m. The 5-day average is -$29m, the 20-day average of -$26m and the 100-day average of -$21m.
• Malaysia: Recorded outflows of -$12m as of yesterday, totaling -$121m over the past 5 days. YTD flows are negative at -$3,663m. The 5-day average is -$31m, the 20-day average of -$29m and the 100-day average of -$23m.
• Philippines: Saw no flows yesterday, with net outflows of -$47m over the past 5 days. YTD flows are negative at -$564m. The 5-day average is -$10m, the 20-day average of -$17m the 100-day average of -$5m.