EM ASIA CREDIT: MNI EM Credit Market Wrap - Asia
** The main stories out of the region**
10yr U.S. treasury yields were wider in the Asia-Pacific session (+1.5bp), with markets digesting news regarding U.S auto tariffs (25%). The implications for which could be wide spread. Hyundai was weaker as a consequence, with equity and bonds lower. This follows previously announced plans to invest as much as $21bn in the U.S. by 2028, which the market considered a possible reason for tariff concessions. Asia EM was mostly wider with our $ Malaysia proxy, the sovereign wealth fund, the main underperformer (+5bp). In the new issuance space, we had the Bank of the Philippine Islands dual tranche $ deal.
Best & Worst Performers (zsprd, bp)
Source: Bloomberg
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BONDS: US and UK Roll update
ROLLS continue to dominate, June is not quite yet front Month for Gilt or Treasuries, but will likely be into Tomorrow.
- Ultra 30: 56%.
- TBond: 52%.
- Ultra 10: 52%.
- TYA: 57%.
- FVA: 51%.
- TUA: 57%.
- Gilt: 40% (as of Yesterday).
BUNDS: /SWAPS: Swap Spreads Remain Under Pressure On Debt Brake Reform Risk
BBG headlines note that German 10-Year swap spreads hit an all-time low.
- The headline is based on closing levels if quoting conventional swaps vs. Bunds, spread last ~-8bp, all-time intraday low at -9.26bp.
- Although both Bund vs. 3-month & 6-month Euribor ASWs are at all-time lows, just for completeness.
- Debt brake reform odds continue to weigh on long dated swap spreads/ASWs..
- We've written a lot about how fundamentals continue to screen bearish for long end swap spreads, although debt brake negotiations and already short positioning in spreads may promote vol.
STIR: SFRN5 96.50/97.00 Call Spread Blocked
Latest block trades lodged at 07:56:05 London/02:56:05 NY:
- SFRN5 96.50/97.00 call spread 2.5K lots blocked at 4.25, CME indicates a buyer.
- Another ~3.2K traded on screen around the block.
