EM ASIA CREDIT: MNI EM Credit Market Update - Asia

The 2-year bond auction showed improved demand today. The low price came in slightly above the forecasted 100.055, according to a Bloomberg poll, while the cover ratio rose to 3.4085x from 3.1637x. The auction tail also shortened slightly compared to the previous month.

• The auction took place with the 2-year yield standing slightly higher than last month’s outing, hovering just below the highest level since 2008 set last week.  
• However, the 2/5 and 2/10 yield curves were 5-10bps steeper compared to the previous month's auction.
• The result is likely to be seen as constructive given it followed Friday’s Tokyo CPI release, a key leading indicator for national inflation, which printed higher than expectations across all measures.
• Demand metrics contrasted with the mixed results seen in the 5-year auction earlier this month and likely reflect heightened demand for haven assets as concern over the health of the US economy continues to grow.
• Post-auction, the 2-year yield has richened by approximately 0.5bp. 

The Japanese Ministry of Finance (MoF) sells Y1,978.8bn 2-Year JGBs:

• Average Yield: 0.863% (prev. 0.826%)
• Average Price: 100.071 (prev. 99.948)
• High Yield: 0.869% (prev. 0.833%)
• Low price: 100.060 (prev. 99.935)
• % Allotted At High Yield: 46.8270% (prev. 62.4996%)
• Bid/Cover: 3.4085x (prev. 3.1637x)

With tariff headlines dominating, India is considering lowering tariffs on US agriculture products as strong inflows continue into the country.   Taiwan and South Korea enjoyed a short respite in flows, only for that to turn significantly negative again with Indonesia and Malaysia out.   

• South Korea: Recorded outflows of -$513m Friday, bringing the 5-day total to -$228m. 2025 to date flows are -$4,095m. The 5-day average is -$46m, the 20-day average is -$75m and the 100-day average of -$93m.
• Taiwan: Had outflows of -$1,028m Friday, with total outflows of -$2,607m over the past 5 days. YTD flows are negative at -$17,432. The 5-day average is -$521m, the 20-day average of -$614m and the 100-day average of -$255m.
• India: Saw inflows of +$947m as of the 27th, with a total inflow of +$3,231m over the previous 5 days. YTD outflows stand at -$12,796m. The 5-day average is  +$646m, the 20-day average of -$14m and the 100-day average of -$144m.
• Thailand: Recorded outflows of -$67m yesterday, totaling -$121m over the past 5 days. YTD flows are negative at -$1,128m. The 5-day average is -$24m, the 20-day average of -$30m the 100-day average of -$18m.
• Philippines: Saw inflows of +$1m yesterday, with net outflows of -$34m over the past 5 days. YTD flows are negative at -$214m. The 5-day average is -$7m, the 20-day average of +$2m the 100-day average of -$7m.