EM ASIA CREDIT: Jinan Energy (GUOENV, Baa1/NR/NR) - new $ deal

The USD/CNY fix printed at 7.2110, versus a BBG market consensus of 7.3185. 

• This is modestly above Friday's 7.2087 fixing outcome. Still, today's fixing is the highest since Sep 2023. The fixing error didn't shift much, printing at -1075pips (Friday's was -980pips)
• USD/CNH has risen post the fixing. The pair last tracking towards 7.3050, up around 0.25%. Earlier lows, were at 7.2776. 

In Tokyo morning trade, JGB futures are slightly weaker, -5 compared to settlement levels, after reversing early gains. 

• “Japan is gearing up for trade negotiations with the United States that will likely touch on the thorny topic of currency policy, with some officials privately bracing for Washington to call on Tokyo to prop up the yen.” (per RTRS)
• “Prime Minister Shigeru Ishiba on Friday set up a task force to oversee trade negotiations with the United States, headed by his close aide and Economy Minister Ryosei Akazawa, who domestic media said will visit Washington next week.”
• Cash US tsys are flat to 3bps richer, with a steepening bias, in today’s Asia-Pac session after Friday’s heavy session. Last week, the US 10-year yield rose almost 50bps in 5 days, one of the biggest moves in that number of days since 1998.
• Cash JGBs are 1-4bps cheaper across benchmarks, with a steepener curve. The benchmark 10-year yield is 1.3bps higher at 1.337% versus the cycle high of 1.596%.
• Swap rates are 1-5bps higher. Swap spreads are wider.

The short AUD trade is being attacked on multiple fronts. US equities are bouncing, the USD is being sold across the board and commodities have turned higher. The CFTC data shows Asset managers were active last week paring back their shorts aggressively. Leveraged funds still hold a decent short perhaps still in the crosses they will be hoping for some sellers to return this week. 

1. Australia’s two major parties held their 2025 election campaign launches on Sunday, revealing plans to allow residents to tax deduct their mortgages and setting aside billions of dollars to build new houses for first-time home buyers. Opinion polls are still suggesting a return of the incumbent Labour party to power.  

• EUR/AUD - Friday night range 1.7979 - 1.8448, some consolidation in a wide and whippy 1.76 - 1.85 range. Asia opened under pressure down to 1.7942 but has since found buyers and has moved back to the 1.8050 area.
• GBP/AUD - Friday night range 2.0756 - 2.1118, GBP/AUD finally found some support back toward 2.05/06 as the GBP played catch up to the move lower in the USD.
• AUD/JPY - Friday night range 88.30 - 91.51, testing higher towards 91.00 on the Asian open but has since fallen away trading around 90.25.The 92/94 area is very strong resistance but the weekly shadow and rejection of the pivotal 85.00 area will make shorts nervous. While markets remain in turmoil and uncertainty high the JPY crosses should continue to find sellers on bounces.
• AUD/NZD -  Overnight range 1.0695 - 1.0804, the cross opens bid in Asia but above 1.0800 but has since fallen back to around 1.0775. Resistance towards 1.0950/1.1000 should be tough first up, look for some consolidation after stale longs have been stopped out last week.

Fig 1: AUD CFTC Positioning