EM ASIA CREDIT: MNI EM Credit Market Wrap - Asia
** The main stories out of the region**
We followed on from LATAM this morning. In their secondary market price action was generally muted and lagged the US Treasury rally, so spreads widened. In Asia hours, the theme continued with regards to Treasuries, higher again, with yields a couple bp lower. In contrast to LATAM however the main government/agency bonds in the region were as much as 3bp tighter, China being the main outlier (+2bp).
In terms of newsflow, we didn’t see any follow-up from the Korea Electric Power dollar mandate, no further update from them, or any new issues for that matter. In geopolitics, the US Postal Service (USPS) announced it would stop accepting packages from China, but we downplayed the impact on Alibaba in our comments given the small scale of USPS. Finally, Korean tech company Naver, has welcomed back its founder to the board, which in my opinion will help re-energise the company as it looks to expand in AI. Positive for spreads.
Best & Worst Performers (zprd, bp)
Source: Bloomberg
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STIR: A Little Over 100bp Of ECB Cuts Priced For '25
Weakness in the long end has triggered hawkish repricing in EUR STIRs during early ’25, leaving ~103bp of easing priced through Dec vs. ~105bp late Friday and 115-120bp seen ahead of the Christmas break.
- Euribor futures 2.0 to 4.0 lower.
- ERZ5 ~10 ticks off its early November low.
- Services PMI data (final for Germany, France & the Eurozone) is due today, as is the flash German CPI data.
- Preliminary Eurozone CPI data is due tomorrow. The BBG survey median looks for +2.4% Y/Y for the headline CPI release vs. +2.2% in Nov.
- Our full preview of that release can be found here.
ECB Meeting | €STR ECB-Dated OIS (%) | Difference Vs. Current Effective €STR Rate (bp) |
Jan-25 | 2.654 | -26.5 |
Mar-25 | 2.375 | -54.4 |
Apr-25 | 2.178 | -74.1 |
Jun-25 | 2.046 | -87.3 |
Jul-25 | 1.999 | -92.0 |
Sep-25 | 1.936 | -98.3 |
Oct-25 | 1.905 | -101.4 |
Dec-25 | 1.888 | -103.1 |
SILVER TECHS: Still Looking For Weakness
- RES 4: $34.903 - High Oct 23 and the bull trigger
- RES 3: $33.125 - High Nov 1
- RES 2: $32.338 - High Dec 12 and a key resistance
- RES 1: $30.529 - 50-day EMA
- PRICE: $29.644 @ 08:11 GMT Jan 6
- SUP 1: $28.748 - Low Dec 19
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
A bear cycle in Silver that started Oct 23 remains in play - for now. The metal has recently breached support at $29.642, the Nov 28 low. The break lower opens $28.446, a Fibonacci retracement. Note that moving average studies are in a bear-mode position highlighting a dominant downtrend. Key resistance has been defined at $32.338, the Dec 12 high. A break of this level would signal a reversal.
USDCAD TECHS: Bull Flag
- RES 4: 1.4678 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4389 @ 08:08 GMT Jan 6
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4320/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD bulls remain in the driver’s seat. The latest pause in the uptrend appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4320, the 20-day EMA. A pullback would be considered corrective.
