EM ASIA CREDIT: MNI EM Credit Market Update - Asia
Asia EM $ sovereign and agency spreads are 1–2bp wider this morning, with a weaker bias and no significant outliers. The main newsflow centres on US tariffs on semiconductors: President Trump reiterated that the US will impose 100% tariffs on products containing chips. South Korea has secured Most Favoured Nation (MFN) status for semiconductors, exempting companies like Samsung Electronics and SK Hynix. By contrast, the Philippines—a country where semiconductors account for about 40% of exports—is not exempt and faces the full tariffs, negative credit. There is no new $ benchmark issuance this morning.
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JGBS AUCTION: 5Y Supply Faces A Similar Yield & Curve
The Japanese Ministry of Finance (MoF) will today sell Y2.4tn of 5-Year JGBs. The MoF last sold 5-year debt on 19 June 2025.
- Yields on today’s offering are around last month’s issuance levels but remain 25bps below the cycle peak.
- The 2s/5s yield curve is little changed since last month and sits just below its cycle peak.
- Amid mixed to weak demand at recent auctions, today’s results will be closely watched for signs of continued softness.
- Results are due at 0435 BST / 1235 JST.
JGBS AUCTION: Poll: 5-Year JGB Auction
*JAPAN 5Y GOVT BOND AUCTION MAY HAVE 100.03 LOWEST PRICE: POLL – BLOOMBERG
FOREX: Leveraged Investors Sell EUR, GBP, Asset Managers Buy Per CFTC
The CFTC FX positioning update (for the week ending July 1) didn't point to strong directional shifts for the USD. The table below updates positioning by currency and investor type, as well as changes from the prior week.
- In the leveraged space, EUR and GBP were sold, but net longs still prevail for this investor segment for these currencies (albeit just for GBP). There was little changed in JPY positioning for leveraged investors, which remains an outright long. The AUD short was largely maintained, while the NZD short was cut back modestly.
- For asset managers, we saw some offset, with EUR and GBP bought. This added to the EUR net long, and cut the GBP net short. The recently established NZD net long was cut, while CAD shorts were added.
Table 1: CFTC Positioning Data By Currency & Investor Type
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | -137 | 15798 | 1750 | 94753 |
| EUR | -6502 | 5032 | 6055 | 366743 |
| GBP | -8929 | 36479 | 5324 | -9790 |
| AUD | 60 | -22903 | 945 | -35992 |
| NZD | 3557 | -8424 | -3680 | 8515 |
| CAD | 2009 | -27068 | -10301 | -36386 |
| CHF | -2258 | 1287 | -45 | -36832 |
| MXN | 4421 | -6121 | 1513 | 39499 |
Source: Bloomberg Finance L.P./CFTC/MNI
