SINGAPORE: J.P. Morgan Maintains MAS July Easing View
J.P. Morgan maintains further easing call at MAS meeting in July. The US bank maintained its view post yesterday's slightly softer CPI print. See below for more details.
J.P. Morgan: "Lower Brent and slower growth to keep inflation low; maintain 50bp July S$NEER slope reduction call: We expect the current low inflation momentum to persist, helped by both weaker oil prices on the supply side and a sharp slowing in growth momentum on the other. Growth last quarter abruptly slowed to 3.8%oya from 5%oya in 4Q24, significantly undershooting expectations as weakness in the external-facing manufacturing sector spilled over into the services economy. In sequential terms, the economy contracted by 3%q/q, saar, with services GDP recording a tepid 1%ar expansion, down from an average 4%ar growth over the last few quarters. Even though US reciprocal tariffs have been temporarily paused, we expect growth to remain under pressure amid still-elevated uncertainty surrounding global trade policy.
Against this backdrop, we maintain our view that the current and forward-looking configuration of macro fundamentals is supportive of further easing in FX policy. We continue to expect the MAS to deliver another 50bp slope reduction at the July meeting, taking the S$NEER to a flat slope from an estimated 0.5% currently and 1.5% at the start of the year"
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ASIA STOCKS: India Has Second Day of Big Inflow.
Ongoing outflows from the Indian equity market took a temporary breather on Thursday yet then repeated Friday with one of the largest inflows since early February as regional neighbours all recorded outflows.
- South Korea: Recorded outflows of -$17m yesterday, bringing the 5-day total to +$1,320m. 2025 to date flows are -$3,883m. The 5-day average is +$264m, the 20-day average is -$109m and the 100-day average of -$97m.
- Taiwan: Had outflows of -$345m yesterday, with total outflows of -$1160m over the past 5 days. YTD flows are negative at -$15,170. The 5-day average is -$232m, the 20-day average of -$657m and the 100-day average of -$231m.
- India: Saw inflows of +$610m as of the 21st, with a total inflow of +$515m over the previous 5 days. YTD outflows stand at -$15,417m. The 5-day average is +$103m, the 20-day average of -$234m and the 100-day average of -$183m.
- Indonesia: Posted outflows of -$10m yesterday, bringing the 5-day total to -$388m. YTD flows are negative at -$2,035m. The 5-day average is -$78m, the 20-day average is -$55m the 100-day average of -$36m.
- Thailand: Recorded outflows of -$2m yesterday, totaling -$67m over the past 5 days. YTD flows are negative at -$1,009m. The 5-day average is -$13m, the 20-day average of -$37m the 100-day average of -$19m.
- Malaysia: Experienced outflows of -$64m yesterday, contributing to a 5-day outflow of -$347m. YTD flows stand at -$2,046m. The 5-day average is -$69m, the 20-day average of -$57m the 100-day average of -$36m.
- Philippines: Saw outflows of -$4m yesterday, with net inflows of +$30m over the past 5 days. YTD flows are negative at -$184m. The 5-day average is +$6m, the 20-day average of 0 the 100-day average of -$7m.
AUSSIE BONDS: Cheaper But Off Worst Levels Ahead Of Tonight’s Federal Budget
ACGBs (YM -2.0 & XM -4.5) are weaker but off Sydney session lows on a data-light session.
- Today we will see the Federal Budget presented around 1930 AEDT, ahead of tomorrow's February CPI data.
- A Federal Election is likely to be called soon after. The Budget is expected to show deficits across the forecast horizon with additional expenditure likely in an attempt to win votes.
- “Australia’s February CPI report is likely to show headline inflation slowing. We estimate CPI gains slowed to 2.4% year on year from 2.5% in January, led by softer prices of food and fuel. Core inflation gauges have been trending higher in recent months but remain in the Reserve Bank of Australia’s 2%-3% target band.” (per BBG)
- Cash US tsys are little changed in today's Asia-Pac session after yesterday's heavy session.
- Cash ACGBs are 2-4bps cheaper with the AU-US 10-year yield differential at +12bps.
- Swap rates are 3-4bps higher.
- The bills strip is -2 to -3 across contracts.
- RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 66bps of easing priced by year-end (based on an effective cash rate of 4.09%).
