ASIA FX: USD/Asia Higher As USD/JPY Soars
Jun-07 05:28
USD/Asia pairs have tracked higher today, gains have been seen across the board. KRW, TWD and THB have seen the largest falls against the USD.
- CNH: USD/CNH is higher, pushing back above 6.6700, around +0.20% above the NY close. Sentiment around the economy continues to improve, while onshore analysts also believe the worst of the CNY depreciation is behind us. Resilience of China equities and higher CGB yields is also helping outperformance against safe havens.
- KRW: Spot USD/KRW has played catch up today as markets re-opened. We are up more than 1.2% to 1258, while the 1 month NDF is slightly higher. Onshore equities have underperformed, down close to 1.4%. The USD/JPY move will have aided won weakness today.
- INR: USD/INR is attempting to break high, with spot opening above 77.70. A broadly stronger USD backdrop and still elevated oil prices is not helping sentiment. Tomorrow the RBI is expected to hike by 50bps.
- IDR: Spot USD/IDR trades +14 figs at IDR14,466, with bulls looking to a swing past May 31 high of IDR14,598 before targeting May 20 & 23 highs of IDR14,678.
- MYR: Spot USD/MYR turns bid as local markets re-open after a holiday. A clean break above May 26 high of MYR4.4012 would encourage bulls to set their sights on MYR4.4085, the high print of May 19. We currently trade 4.3980. Looking ahead, Malaysia's industrial output will be out on Friday.
- PHP: Spot USD/PHP is back above 52.93. Consumer prices quickened to +5.4% Y/Y in May from +4.9% recorded in April, matching consensus forecast and reaching the fastest pace since November 2018. BSP Gov Diokno said CPI is expected to settle above the +2.0-4.0% Y/Y target range this year, while risks lean to the upside for both 2022 and 2023.
- THB: USD/THB is +0.48% higher on the day. We sit just above 34.47. Tomorrow's BoT meeting is expected to deliver no change, but price pressures are building. BoT will be on watch for second-round price effects after yesterday's much stronger than expected inflation print.
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US TSYS: Yield Curves Bear Steepen, Focus on Fed over Jobs Data
May-06 20:50
Yield curves continued to bear steepen Friday, 2s10s session high of 43.067 back to early March levels as bond yields climbed to 3.2338% high -- last seen early December 2018. Relative calm end to the week for a NFP session.
- Tsy futures bounced higher briefly, scaled back amid steady selling after Apr NFP jobs gained more than estimated +428k vs. +380k est, avg hourly earning little weaker than exp at 0.3% vs. 0.4% est. Total down-revisions to Feb-Mar -39k.
- Fed out of blackout: limited react to essay published by Minneapolis Fed Pres Kashkari: Long-Term Real Rates Are Already Back To Neutral. ""If the economy is in fact in a higher-pressure equilibrium, that might indicate the neutral long-term real rate has increased, which would then require even higher rates to reach a contractionary stance that would bring the economy into balance."
- MNI interview w/ Richmond Fed Barkin: interest rate increases are not on a preset course and he would like to see interest rates on a path to normal that is as fast as feasible, backing this week's historic FOMC decision to raise the fed funds rate 50bps, while not ruling out the potential for a supersized 75bp increase if needed.
US: Late Corporate Credit Update: Back Near 2Y Highs Late
May-06 20:27
Investment-grade corporate credit risk has see-sawed back near new 2Y highs tapped early Friday, closing levels well off midday lows as stocks traded modestly weaker: S&P E-Mini Future down 30.25 points (-0.73%) at 4113.75
- Investment grade risk measured by Markit's CDXIG5 index currently +3.464 at 86.919 vs. new 2Y high of 87.321 around midmorning; CDXHY5 high yield index at 100.813 (-0.837).
- Outperforming credit sectors (tighter or least wide): Financials - subordinated (-0.2) followed by Energy (+0.4).
- Lagging sectors (wider or least narrow): Utilities (+1.4) followed by Technology and Consumer Discretionary (+1.3).
US STOCKS: Late Equity Roundup: Mildly Lower on Week
May-06 20:05
Equity indexes weaker into the close are off session lows, upper half of range SPX emini futures, ESM2 currently -30.25 points (-0.73%) at 4113.75 -- near week opener of 4146.25.
- Earnings cycle past the halfway mark, resumes Monday w/ Duke Energy (DUK), Tyson (TSN) before the open, Trex (TREX), Int Flavor/Fragrances (IFF), Cargurus (CARG) after the close.
- SPX leading/lagging sectors: Energy sector extends earlier gains (+2.91%) O&G consumables outpacing energy and equipment serving names. Utilities sector follows (+0.81%). Laggers: Materials sector holding near lows (-1.40%) w/ construction materials shares lagging; Communications sector (-1.30%).
- Meanwhile, Dow Industrials currently trades -97.15 points (-0.29%) at 32901.08, Nasdaq -173 points (-1.4%) at 12144.66.
- Dow Industrials Leaders/Laggers: United Health outperforms (UNH) +5.10 at 499.82, Chevron (CVX) +4.00 at 170.26. Laggers: Home Depot (HD) continues to sag -4.47 at 294.64, Nike (NKE) -3.62 at 115.01.
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