INDIA: India Updated Swaps Pricing Vs. Pre-RBI Meeting Levels
Aug-22 02:59
- We assess the change in expectations for rate move via an analysis of the swaps curve. We compare the three month on a forward basis each month out to 12 months. We look to use this as an indicator for a change in expectations from week to week, comparing it to the FBIL Overnight Mumbai Interbank Outright Rate (FBIL- Overnight MIBOR) as per market standard.
- The swaps curve has 5bps of increases over the next 12 months up from 16bps Monday. By way of comparison, the BBG MIPR function has decreases of -18bps over the next 12 months, down from +2bp Monday.
- The key output from this week has been the exceptionally strong PMIs showing that for now the Indian economy seems to be brushing off the tariff threat from the US. The bond market sold off at the early part of the week on fiscal concerns given the announcement by PM Modi of GST changes.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GLOBAL MACRO: July Sees Unwinding Of Sharp June Rise In Container Rates
Jul-23 02:57
Global container shipping rates have reflected the changes in demand related to US tariff deadlines but are down sharply compared to a year ago. Bloomberg container ship tracking data showed that departures were up in June ahead of the earlier July 9 deadline, but vessels departing for the US are down again in July. The tariff date was shifted to August 1.
Global FBX container rates USD/points
Source: MNI - Market News/LSEG
- Container shipping rates spiked in June, particularly for the China/East Asia to east coast of North America route. The total rose 57.5% m/m with the latter up 77.9% m/m. In contrast, the month average for July is down 26% m/m and 32.5% m/m respectively.
- Both indices are down over 50% on the year, which should help alleviate some cost pressures. Risks to shipping in the Red Sea drove a sharp increase in H1 2024, which has now dissipated.
- While the Baltic Freight dry index (bulk commodity rates) also rose sharply in June (+25.3% m/m), it has continued to climb this month up another 6% m/m. It can be a lead indicator of global trade trends and it currently suggests that despite heightened uncertainty, it should hold up for now. Trade grew 3.8% y/y in April with exports up 4.7% y/y.
Global trade vs Baltic Freight Index
Source: MNI - Market News/LSEG
JAPAN: Local Media States PM Ishiba To Resign In August
Jul-23 02:38
Headlines have crossed from local newspaper Mainichi that PM Ishiba will resign by the end of August. Via Rtrs: "Japan's Prime Minister Shigeru Ishiba has made up his mind to resign, Mainichi newspaper reported on Wednesday."
- Earlier PM Ishiba wouldn't be drawn on speculation around his future, stating that he would assess the US-Japan trade deal details before making any decision.
- Still, in the aftermath of the weekend upper house result, which saw the ruling LDP coalition lose its majority, Ishiba's future has been speculated on.
- His removal odds per Polymarket has remained elevated this week, but sub recent highs.
- The market reaction has been for USD/JPY to rise, testing up through 147.00 (highs were at 147.20, but we sit back near 147.00 in latets dealings)Japan equities have also rallied further.
- JGB yields are higher across the curve so far today, with focus on the 40yr debt auction in a little while. Risks around fiscal slippage for Japan will remain elevated if Ishiba resigns.
JGBS AUCTION: 40Y Supply Faces Higher Yield But Flatter 10/40 Curve
Jul-23 02:31
The Japanese Ministry of Finance (MoF) is set to auction 400 billion of 40-year JGBs today. The previous 40-year auction of 500 billion was held on 28 May 2025.
- Today’s auction follows the announcement of a new trade deal between the U.S. and Japan. President Trump stated that Japan will invest $550 billion into the U.S. and open its markets further to U.S. car and agricultural exports. As part of the deal, Japan will impose a 15% reciprocal tariff on U.S. goods, lower than the previously threatened 25% rate.
- Cash JGBs are 3–8bps cheaper across the curve, with the benchmark 40-year yield up 3.4bps to 3.411%, compared to its recent cycle high of 3.60%.
- The current 40-year auction yield is tracking about 30bps higher than the previous auction.
- However, the 10s40s curve has flattened 30bps since reaching its recent peak.
- Results are due at 0435 BST / 1235 JST.
