EM ASIA CREDIT: MNI EM Credit – CEEMEA and LATAM update

In post-Tokyo trade on Friday, JGB futures closed stronger, +20 compared to settlement levels, after US tsys finished with a modest twist-flattener.

• However, US tsys futures are sharply stronger in today's Asia-Pac session following the weekend's Middle East conflict developments. There will be no cash trading today for the Memorial Day holiday.
• There has been a risk on move at the start of the week's trading on growing optimism that there will be a US-Iran deal after President Trump said that an agreement is close but this was followed by doubts voiced by both Trump and the Iranians.
• Trump said that he won't "rush into a deal" and talks are ongoing and there still seem some sticking points, such as the release of frozen Iranian assets.
• MNI BRIEF: Waller Would Hike If Mid-Term Price Expectation Rise. Federal Reserve Governor Chris Waller said Friday a rise in medium-term inflation expectations would prompt him to consider hiking rates.
• Today, the local calendar will see Department Sales data alongside 5-year Climate Transition supply.

ACGBs (YM +1.0 & XM +3.5) are modestly stronger with US tsys futures sharply stronger following the weekend's Middle East conflict developments.

• There has been a risk on move at the start of the week's trading on growing optimism that there will be a US-Iran deal after President Trump said that an agreement is close but this was followed by doubts voiced by both Trump and the Iranians.
• Trump said that he won't "rush into a deal" and talks are ongoing and there still seem some sticking points, such as the release of frozen Iranian assets.
• Cash ACGBs are 2-3bps richer with the AU-US 10-year yield differential at +33bps, lowest since late last year.
• The bills strip has twist-flattened, with pricing -1 to +3 across contracts.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 10% for June to 73% by September and 104% by December 2026.  
• The local calendar will be empty today and tomorrow ahead of April CPI data on Wednesday.
• This week, ACGB supply will be below the recent weekly issuance average of $2000mn. The AOFM only plans to sell A$1000mn of the 2.75% 21 November 2029 bond on Friday.

NZGBs are 3bps richer with US tsys futures sharply stronger following the weekend’s Middle East conflict developments.  

• There has been a risk on move at the start of the week’s trading on growing optimism that there will be a US-Iran deal after President Trump said that an agreement is close but this was followed by doubts voiced by both Trump and the Iranians.
• Trump said that he won’t “rush into a deal” and talks are ongoing and there still seem some sticking points, such as the release of frozen Iranian assets.
• Energy prices are down sharply with Brent crude falling below $100/bbl and currently down around 5.1% lower at $98.17/bbl.
• Swap rates are 4bps lower.
• The local calendar will be empty today ahead of the RBNZ Policy Decision on Wednesday.
• RBNZ-dated OIS pricing is little changed across meetings. 4bps of tightening is priced for Wednesday, while February 2027 assigns 92bps.
• "Reuters poll: 28 of 29 economists expect the Reserve Bank of New Zealand to leave the cash rate unchanged at 2.25% on May 27. Reuters poll: 14 of 27 economists expect the RBNZ to lift the official cash rate to 2.50% or higher by end-Q3, while the median year-end OCR forecast stands at 2.75% (vs 2.50% in the April poll)."