EM ASIA CREDIT: MNI EM Credit Market Update - Asia

TYM5 has traded lower within a range of 110-30 to 111-03 during the Asia-Pacific session. It last changed hands at 110-30, down 0-03 from the previous close.

• Futures are trading lower in Asia as China returns from holidays, China’s April's PMI services unexpectedly dipped in April in signs that the US tariff war is hurting.
• The CAIXIN PMI services had printed above 51 for six successive months and market expectations were for a continuation of this theme and a print of +51.8.
• April's result of +50.7 is the lowest since September and could be an early warning sign that the economy is slowing quicker than first thought.
• Risk in Asia has traded on the backfoot for most of our session following on from the poor close in the US.
• No cash market today with a holiday in Japan. 
• The 10-year Yield range seems to be 4.10% - 4.45%, price has moved above the 4.30% pivot and with more supply to come this week a push back to 4.45% is possible before the buyers come in.
• Data/Events :  US Trade balance

NZGBs closed showing a bear-steepener, with benchmark yields finishing 1-4bps higher but slightly off the session’s worst levels. The NZ-AU 10-year yield differential was unchanged at +21bps. There were no cash dealings in US tsys in today's Asia-Pac session with Japan out. TYM5 is slightly cheaper. 

• NZ’s commodity export prices were unchanged from a month earlier in April.
• Swap rates closed flat to 4bps higher, with the 2s10s curve steeper.
• RBNZ dated OIS pricing closed little changed across meetings. 26bps of easing is priced for May, with a cumulative 76bps by November 2025.
• Q1 labour market data are released on Wednesday, and forecasts are in a narrow range across the major components. Bloomberg consensus expects the unemployment rate to rise 0.2pp to 5.3%, above the RBNZ’s 5.2% and would be the highest since Q4 2016, and employment to rise 0.1% q/q, signalling a stabilisation in the labour market.
• Private wages are expected to rise 0.5% q/q, slightly slower than Q4. Outcomes close to these are unlikely to alter the RBNZ’s probable 25bp rate cut on May 28.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 4.25% May-36 bond and NZ$50mn of the 2.75% May-51 bond.

• Following the long labour day break in China the first trading day back has seen marginally stronger bond markets, despite the Central Bank withdrawing liquidity in the open market operations.
• China’s 10YR bond future is up just +0.05 to 109.10; consolidating its’ position above all major moving averages.  The nearest being the 20-day EMA at 108.79
• China’s 2YR bond future has barely moved post the holiday break and remains at 102.35, below the 20-day EMA of 102.42.
• CGB’s are little changed with the CGB 10YR at 1.62% (-0.5bp today). 
• Later this week China is expected to issue CNY71bn of 2055 bonds and CNY170bn of 2026 bonds