EM ASIA CREDIT: MNI EM Credit Market Update - Asia
U.S Treasury yields are 2bp lower at 4.3% as investors await todays jobs data and what it might mean for U.S. Fed rate decisions. Asia EM $ govie/agency spreads have shown a weaker bias today with spreads 1-2bp wider. The outlier being South Korea (+4bp), with President Lee indicating he wasn’t sure if South Korea can conclude U.S. tariff talks by July 8. Asia equities are mostly better on the day, with South Korea's KOSPI up +1.3% on the back of legal changes that boost corporate governance and the rights of minority shareholders. Newsflow was relatively quiet, that said the Malaysian sovereign wealth fund, Khazanah Capital, which was reported to be linked to a 1.5% sale of a stake in Tenaga Nasional, has reportedly called the sale off due to a negative tax ruling on Tenaga Nasional announced today. In the new issue space, we have a $benchmark 3Y from Zhangzhou Jiulongjiang, and an update on the Shinhan Financial $ 5Y 2 Week mandate, which is now expected to come on Monday.
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STIR: EZ May Flash Inflation Due This AM; Not Expected To Change ECB Expectation
ECB-dated OIS price 57bps of easing through year-end, ~1bp more dovish than yesterday’s close. The Eurozone-wide flash inflation print at 1000BST today is the last major data release before Thursday’s ECB decision. The data is unlikely to change the narrative for the June meeting though, with a 25bp cut fully priced and the June macroeconomic projections already set in stone. MNI’s full ECB preview will be released this afternoon.
- Following this morning’s soft Dutch data (3.0% Y/Y vs 3.8% cons, 4.1% prior), there appear downside risks to consensus of a 2.0% Y/Y headline Eurozone print (as we noted last week). However, analyst tracking of the core reading suggests possible upside risks to the 2.4% Y/Y consensus.
- Euribor futures are +0.5 to +3.5 ticks through the blues, with the strip lightly bull flattening. Euribor markets begin pricing rate hikes from Q2 2026 (ER H6/M6 spread is +1.5 ticks), as initial growth-negative tariff impacts fade and EU/German fiscal impulses begin to kick in.
- Today’s calendar also features the April unemployment rate, which is expected to remain at 6.2%.
| Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
| Jun-25 | 1.926 | -24.6 |
| Jul-25 | 1.864 | -30.8 |
| Sep-25 | 1.725 | -44.7 |
| Oct-25 | 1.682 | -49.0 |
| Dec-25 | 1.605 | -56.7 |
| Feb-26 | 1.582 | -59.0 |
| Mar-26 | 1.562 | -61.1 |
| Apr-26 | 1.562 | -61.0 |
| Source: MNI/Bloomberg. | ||
SILVER TECHS: Impulsive Rally
- RES 4: $35.728 - 0.764 proj of the Apr 7 - 25 - May 15 price swing
- RES 3: $35.000 - Round number resistance
- RES 2: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 1: $34.789 - High Jun 2
- PRICE: $34.108 @ 08:12 BST Jun 3
- SUP 1: $32.790/31.651 - 50-day EMA / Low May 15
- SUP 2: $30.915/28.351 - Low Apr 11 / 7 and the bear trigger
- SUP 3: $27.686 - Low Sep 6 ‘24
- SUP 4: $27.180 - Low Aug 14 ‘24
A strong rally in Silver on Monday confirms a resumption of the uptrend. The rally resulted in the breach of a number of important resistance points. This signals scope for an extension towards $34.903, the Oct 23 ‘24 high and a bull trigger. A clear break of this level would mark an important medium-term bullish development. Key short-term support is at $31.651, the May 15 low. A clear break of this level is required to highlight a reversal.
RIKSBANK: Finance Committee Hearing Backward Looking In Nature; Focus On May CPI
Riksbank Executive Board hearing on 2024 Monetary Policy opening remarks here. Unsurprisingly given the topic of the hearing, the opening remarks are backward-looking in nature. More interest will be in the upcoming Q&A, where there is some scope for MonPol signals ahead of the June 18 decision.
- However, with May flash CPIF due on Thursday morning, we don't expect any Executive Board member to make any explicit forward looking remarks.
- A June cut is ~50% implied by markets, placing a lot of focus on the flash inflation release (as well as the final reading on June 13).
