EM ASIA CREDIT: MNI EM Credit Overnight – LATAM & CEEMEA

Oil prices finished August softer and were also lower on the month overall. They were down Friday as the excess supply outlook continued to weigh especially as August US consumer sentiment fell to the lowest since May adding to energy demand worries. 

• WTI fell 0.9% to $64.01/bbl after reaching $64.55. While the benchmark rose 0.6% on the week it finished August down 6.1%. It has started today around $63.93. The bear cycle remains intact with the bear trigger at $61.29. Key resistance is at $69.36.
• Brent was down 0.7% to $68.12/bbl after a high of $68.39 and a low of $67.90. It was down 5% in August. Short-term gains continue to seem corrective. Initial support is at $64.50, 30 June low, while key resistance is at $71.93.
• Ukraine hit two Russian refineries over the weekend that apparently provide fuel to the army. Strikes earlier in August cut Russian active capacity by around 13%, according to Bloomberg.
• Attacks on Ukraine intensified again last week, especially on its power infrastructure, putting into doubt any Zelenskyy-Putin meeting and therefore a truce and easing of sanctions on Russia. The EU discussed more sanctions on the weekend focussed on how it is avoiding current restrictions.

JGB futures ended Friday trade 137.54, flat relative to settlement levels, post the Tokyo close. This was up from lows last week, 137.22 (recorded on Aug 26). Still, bear threat in JGBs futures remains present and the contract is trading  closer to its recent lows. A resumption of weakness would signal scope for an extension towards 136.57, a Fibonacci projection.

• The early bias in US Tsy futures today is slightly softer, which may see negative spill over to JGBs. Dovish rhetoric from the Fed's Daly on Friday did drive some gains though.
• Coming up short we have Q2 Capex. The market expects +6.1%y/y, versus 6.4% prior.
• Note tomorrow that BOJ Deputy Governor Himino speaks in Hokkaido.
• The 10yr JGB yield finished up at 1.60% on Friday. 

Early bond future moves are modest, with 3yr futures (YM) last unchanged around 96.59, while 10yr futures (XM) are down 1bps to 95.69. This is mirroring US moves from Friday's session to some degree.

•  In the Aussie government bond yield space it is a similar theme, with front end yields down a touch, while back end yields are firmer. The 3yr benchmark was last around 3.39%, while the 10yr was close to 4.28%.
• In the US on Friday, there was a ate bounce in Tsy futures on SF Fed Daly comment on LinkedIn: that "it will soon be time to recalibrate policy". Still, the 10yr yield remained above 4.20%, while front end yields finished down a touch (2yr to 3.62%). Futures have re-opened a touch softer today.
• Locally, Q2 GDP on Wednesday will be the focus of the week with inventories printing today and the net export and public demand contributions on Tuesday. Bloomberg consensus expects that growth was stronger in Q2 at 0.5% q/q after Q1’s lacklustre 0.2% q/q increase.
• RBA Governor Bullock speaks on Wednesday at 1800 AEST about “Technology and the Future of Central Banking at the RBA”. Then on Thursday Deputy Governor Hauser gives an interview to Reuters.
• In terms of broader yield moves, the 3yr is anchored fairly closely to 3.40% over recent sessions, while the 10yr is oscillating around the 4.30% region.