EM ASIA CREDIT: MNI EM Credit Market Update - Asia
US Treasury yields are more or less unchanged at 4.1% during the Asia session with US Fed Chair Powell indicating overnight that "There Is No Risk-Free Path". In LATAM, the focus stays on Argentina, where sovereign bonds were up 1.5 to 3 points on the back of U.S. government support to help with near term maturities. In Asia, EM USD sovereign and agency spreads traded in a -1bp and +2bp range, with no significant outliers. Asian equities were mostly negative, except for the Hang Seng, which was up 1.4%, buoyed by gains in tech. Alibaba’s CEO confirmed plans to increase AI spending. Additionally, Chinese food delivery companies Meituan and JD.com are rallying on expectations of government intervention to curb the ongoing price war, which could boost margins. USD bonds in the sector are marginally stronger. Meanwhile, Vanke’s USD bonds, which fell about 3 points yesterday amid reports of skipped interest payments, are down again today by around 0.5-1.0 point. Overall, valuations appear well anchored.
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FOREX: Limited moves in G10 FX ahead of the IFO
- There is still very limited movement on this UK bank holiday Monday with the biggest mover in the G10 space AUDJPY (versus the USD the all G10 currencies are within 0.3% of Friday's close).
- The main scheduled event of the day will be the release of the German IFO survey at 9:00BST while we will hear from the Fed's Logan but not until 20:15BST (and it is unclear whether she will speak on monetary policy).
- It will be the second half of the week that we will see the main economic releases of the week with the second estimate of US Q2 GDP due Thursday. Friday will be a very busy data day with Tokyo CPI and flash HICP releases from France, Spain, Italy and Germany as well as July PCE from the US and Q2 GDP from Canada.
- Outside of G10 FX, USDCNH has seen more notable moves with the USDCNY fixing at the lowest level since early November and our Asia team noting that CNH was also helped by China property related equities have been buoyed on headlines of easing Shanghai home buying curbs. See our technical analysts' views above as the cross approaches key support.
