EM ASIA CREDIT: MNI EM Credit Market Update - Asia
Asia EM USD sovereign and agency spreads are trading in a -3bp to +3bp range this morning, with the Philippines outperforming (PHILIP 35s -3bp) and Thailand the underperformer (PTTEPT 30s +3bp). Regional equities are mostly higher, with the Hang Seng the outlier, down 0.6%. In other news, detained Korean workers will be deported today, but the US appears open to creating a new visa category, which would support longer term visas. The new Korea Housing Finance deal was priced overnight (T+40bp), more or less in line with our FV estimate (T+43bp), but no new issues today.
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STIR: RBA Dated OIS Slightly Firmer Ahead Of Today’s RBA Decision
At the time of writing, RBA-dated OIS pricing is slightly firmer on the day across meetings ahead of today’s RBA Policy Decision.
- A 25bp rate cut this week is given a 97% probability, with a cumulative 59bps of easing priced by year-end (based on an effective cash rate of 3.84%).
Figure 1: RBA-Dated OIS – Current Vs. Yesterday
Source: Bloomberg Finance LP / MNI
JGBS: Treading Water Ahead Of Today's US CPI
At the Tokyo lunch break, JGB futures are weaker but off lows, -8 compared to the settlement levels.
- Cash US tsys are little changed in today's Asia-Pac session ahead of today's US CPI data.
- (Bloomberg) "Markets remain skeptical that the Bank of Japan will raise rates soon, even as inflation proves sticky. Economists pencil in one hike by year-end, but with the GDP deflator likely to exceed 3%, homegrown inflation is showing signs of entrenchment, adding to the urgency to tighten policy."
- Cash JGBs are showing a modest sell-off across benchmarks, led by the 4-year. The benchmark 10-year yield is 0.4bp higher at 1.495% versus the cycle high of 1.616%.
- Swap rates are little changed. Swap spreads are mixed.
CHINA PRESS: China Stock Market Hit New High This Year
The benchmark Shanghai Composite Index hit a new high this year, reaching an intra-day peak of 3,650 on Monday, China Securities Journal reported. The turnover in the A-share market exceeded CNY1.8 trillion, with over 4,100 stocks rising and over 80 of them hit the day limit, the newspaper said.
