EM ASIA CREDIT: MNI EM Credit Market Update - Asia
US Treasury yields are slightly lower by 1bp, around 4.1%, with no new progress on the US government shutdown as of today. Asia EM USD sovereign and agency spreads traded in a narrow range of +/-1bp, reflecting quiet markets partly due to China and South Korea holidays. Gold continued its strong rally, rising above USD 4,000 per ounce for the first time.
Overnight, the EU’s plans to increase steel tariffs and adjust import quotas have caused some concern in South Korea; however, POSCO’s USD bonds actually traded a few basis points better on the day. The LG India IPO was a success, which may encourage more deals to come. Additionally, Indonesia launched a new USD dual-tranche deal, with a potential EUR issue announcement expected at the London open.
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SILVER TECHS: Bulls Remain In The Driver’s Seat
- RES 4: $42.606 - 2.236 proj of the Jul 31 - Aug 14 - 20 price swing
- RES 3: $42.323 - 1.764 proj of the Apr 7 - 25 - May 15 swing
- RES 2:$42.000 - Round number resistance
- RES 1: $41.467 - High Sep 3
- PRICE: $41.040 @ 08:04 BST Sep 8
- SUP 1: $39.363 - 20-day EMA
- SUP 2: $39.147 - 50-day EMA
- SUP 3: $36.216 - Low Jul 31 and a key support
- SUP 4: $35.285 - Low Jun 24
Trend signals in Silver remain bullish and the metal is holding on to its recent gains. Resistance at $39.530, the Jul 23 high, has been cleared. This confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position, reinforcing current trend conditions. Sights are on the $42.00 handle next. Initial support to watch is $39.363, the 20-day EMA.
STIR: Weak REC Jobs Report Has Little Impact On BOE Pricing
SONIA futures are flat to -1.0 ticks through the blues, with the weak KPMG-REC jobs report released overnight having little tangible impact on near-term BOE pricing. BOE-dated OIS continue to price ~5bps of easing through November and ~11bps of easing through year-end. The next full 25bp cut is not fully priced until March 2026.
- The REC report showed further labour market softening - the most notable of which was the "steepest upturn in candidate availability since November 2020."
- All in all, we conclude that the probability of a November 25bp cut is increased a little by this report and it follows the DMP survey last week to be another downbeat labour result.
- However, we still need to see continued deterioration in the official labour market statistics and other labour surveys ahead of the November decision (including Agents' survey). And importantly, any earlier indications regarding pay settlements for 2026 will be key to the decision, too.
- This week’s UK calendar is light, with BRC shop sales for August due overnight before monthly activity data for July crosses on Friday. Much more focus will be on next week’s labour market and inflation double header.
| Meeting Date | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Sep-25 | 3.974 | 0.6 |
| Nov-25 | 3.918 | -4.9 |
| Dec-25 | 3.860 | -10.7 |
| Feb-26 | 3.747 | -22.0 |
| Mar-26 | 3.706 | -26.1 |
| Apr-26 | 3.631 | -33.6 |
| Jun-26 | 3.605 | -36.2 |
| Jul-26 | 3.563 | -40.4 |
| Source: MNI/Bloomberg Finance L.P |
USDCAD TECHS: Bull Cycle Remains In Play
- RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 3: 1.3925 High Aug 22 and the bull trigger
- RES 2: 1.3868 High Aug 26
- RES 1: 1.3854 High Sep 05
- PRICE: 1.3827 @ 07:59 BST Sep 8
- SUP 1: 1.3727 Low Aug 27 and a bear trigger
- SUP 2: 1.3709 61.8% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 3: 1.3658 76.4% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 4: 1.3637 Low Jul 25
A bull cycle in USDCAD remains in play. Near term, the recovery from the Aug 29 low highlights a potential early reversal signal and if correct, the end of the corrective pullback between Aug 22 - 29. An extension higher would open the bull trigger at 1.3925, the Aug 22 high. Support lies at 1.3727, the Aug 29 low. Clearance of this level would instead reinstate a short-term bear theme and expose 1.3709, a Fibonacci retracement.
