EM ASIA CREDIT: MNI EM Credit Market Update - Asia

EXECUTIVE SUMMARY

• The BoJ decided to keep its policy rate unchanged at 0.50%, a move fully expected by markets and consensus economists. The decision was made by a unanimous 9-0 vote from the Monetary Policy Committee (MPC).
• The primary focus of the meeting was the pace of quantitative tightening (QT) beyond the near term. From the second quarter of 2026 through the first quarter of 2027, it will slow that pace to ¥200 billion per quarter, a decision backed by an 8-1 vote.
• The BoJ’s policy statement maintained its existing economic and inflation outlook, aside from technical changes to incorporate recent higher inflation prints.
• Importantly, Ueda stated that the BoJ may consider raising interest rates without needing to see clear-cut new signs of rising inflation, should the economic outlook and forecast trajectory warrant such action.
• Overall, the BoJ continues to signal a gradual, data-dependent approach to policy normalisation, balancing market stability, inflation developments, and global uncertainties as it proceeds with cautious tapering into 2026 and beyond.
• Full review here

After a strong period of inflows, recent days have seen outflows beginning whilst Taiwan enjoyed a sizeable inflow yesterday. 

• South Korea: Recorded outflows of -$59m yesterday, bringing the 5-day total to +$286m. 2025 to date flows are -$7,987. The 5-day average is +$57m, the 20-day average is +$169m and the 100-day average of -$80m.
• Taiwan: Had inflows of +$298m as of yesterday, with total inflows of +$1107 m over the past 5 days. YTD flows are negative at -$10,104. The 5-day average is +$203m, the 20-day average of +$74m and the 100-day average of -$95m.
• India: Had outflows of -$308m as of the 16th, with total outflows of -$390m over the past 5 days.  YTD flows are negative -$10,928m.  The 5-day average is -$78m, the 20-day average of -$91m and the 100-day average of -$83m.
• Indonesia: Had inflows of +$16m yesterday, with total inflows of +$24m over the prior five days.  YTD flows are negative -$2,927m.  The 5-day average is +$5m, the 20-day average +$8m and the 100-day average -$29m.
• Thailand: Recorded outflows of -$19m as of yesterday, with outflows totaling -$147m over the past 5 days. YTD flows are negative at -$2,275m. The 5-day average is -$29m, the 20-day average of -$26m and the 100-day average of -$21m.
• Malaysia: Recorded outflows of -$12m as of yesterday, totaling -$121m over the past 5 days. YTD flows are negative at -$3,663m. The 5-day average is -$31m, the 20-day average of -$29m and the 100-day average of -$23m.
• Philippines: Saw no flows yesterday, with net outflows of -$47m over the past 5 days. YTD flows are negative at -$564m. The 5-day average is -$10m, the 20-day average of -$17m the 100-day average of -$5m.

• China's bond futures are trending lower today as the major equity bourses struggle.  
• The 10YR bond future is down -0.03 at 109.11 and remains above the 20-day EMA of 108.92.  
• The 2YR bond future is down -0.005 at 102.53 and is near the mid-point between the 100-day EMA of 102.62 and the 50-day EMA of 102.50.
• The 10YR CGB is stable at 1.69%