EM ASIA CREDIT: JSW Infrastructure: First time S&P rating

• China will remain a vital innovation hub and manufacturing base for foreign corporations despite global economic uncertainty, said government officials and business leaders.  They noted that foreign firms are maintaining deep engagement with the Chinese market, capitalizing on their technological expertise alongside China's well-developed industrial and supply chains — a synergy that enhances operational efficiency, fosters innovation and strengthens supply chain resilience.  (source China Daily)
• US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts in Stockholm next week for their third round of trade talks aimed at extending a tariff truce and widening the discussions.  “That deal expires on Aug. 12,” Bessent said on Fox Business of the scheduled end of the current trade truce between the world’s two largest economies. “I’m going to be in Stockholm on Monday and Tuesday with my Chinese counterparts and we’ll be working out what is likely an extension then.”  (source BBG)
• China and Hong Kong stocks continue to rally as well. The HSI is up over 1%, while the CSI 300 has gained close to 0.75%, putting the index near 4150. General positive sentiment around US-China trade/relations is aiding sentiment. US Tsy Secretary Bessent will meet China officials in Stockholm next week, with the aim of extending the trade truce and expanding talks. US President Trump also stated overnight he may meet China President XI in the not too distant future (per BBG).
• Yuan Reference Rate at 7.1414 Per USD; Estimate 7.1612
• Small sell of in CGBs today with the 10yr at 1.71%

JGB futures are sharply lower, -79 compared to settlement levels, but off the session’s worst levels.

• Today's focus has been on the US-JN trade deal. Japan will pay a 15% reciprocal tariff to the US, which is lower than the 25% rate that had been threatened.
• Kelly Eckhold (Westpac) on LinkedIn: "Trump trade deals progressing. Japan interestingly opens up the rice market in exchange for their tariff being reduced to 15%. That's a huge change for Japan, where rice imports have not been allowed."
• Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after yesterday's modest rally.
• Cash JGBs are 4-8bps cheaper across benchmarks, with the benchmark 40-year yield underperforming after today's supply.
• Demand for today’s 40-year bond issuance was weak, with the high yield clearing well above dealer expectations. According to a Bloomberg survey, the market anticipated a yield of 3.35%, while the actual result came in at 3.375%. The auction’s cover ratio also declined to 2.1273x from 2.2114x at the previous issuance.
• Swap rates are 4-7bps higher, led by the belly of the curve. Swap spreads are mostly wider.
• Tomorrow, the local calendar will see S&P Global PMIs (P).

• RES 4: 131.95 High Jun 13 and the bull trigger
• RES 3: 131.33 High Jun 20  
• RES 2: 130.85 61.8% retracement of the Jun 13 - Jul 14 bear leg 
• RES 1: 130.76 High Jul 22 
• PRICE: 130.45 @ 05:52 BST Jul 23
• SUP 1: 129.73/08 Low Jul 21 / 14 
• SUP 2: 128.97 Low May 14 and a reversal trigger
• SUP 3: 128.90 Low Apr 10 
• SUP 4: 128.40 Low Apr 9

Bund futures traded higher again, on Tuesday. This week’s gains have resulted in a move through resistance around the 50-day EMA, at 130.24. The clear break of the EMA undermines a recent bear theme and highlights a possible reversal. Sights are on 131.27, a Fibonacci retracement. A break of this level would open 131.33, the Jun 20 high. Key support and the bear trigger has been defined at 129.08, the Jul 14 low.