EM ASIA CREDIT: MNI EM Credit Weekly
Our new Global Emerging Markets Weekly…every Friday
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EXECUTIVE SUMMARY:
• EM $ indices were marginally wider (+0.3bp) having set new yearly tights the week before. Tariff risks continued to dominate, with Copper and Brazilian politics the latest targets.
• LATAM $ index spreads outperformed (-3bp), with issuance somewhat subdued. Primary market activity across EM was however stronger on the week, with CEEMEA representing around 60% of new deals.
• In ASIA, Vedanta was the target of short-seller Viceroy, bonds underperformed, though investors didn’t see anything new. Copper tariffs not a driver in Asia.
• In CEEMEA, Turkey’s President Erdogan states government running a full term, supportive for credit - Türkiye tapped investors in € the next day. Copper topical, supportive read DRC’s Ivanhoe Mines despite recent operational headwinds.
• In LATAM, the proposed 50% U.S. tariff on copper had little impact on producer Codelco and the Chile sovereign. A new 50% U.S. tariff on Brazil had a small impact on plane maker Embraer, but not much else.
• In the week ahead, earnings season starts with a focus on guidance related to tariffs. We expect spreads to be soft. In ASIA, event risk for Vedanta remains and we await news on China State support for real estate. In CEEMEA new deals from Turkish corp’s possible following sovereign € deal.
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ECB: Small Upward Revision To Latest ECB Wage Tracker; Broader Trend Intact
There were slight upward revisions to the ECB’s forward looking wage tracker compared to the April vintage, but the broader theme of softening compensation pressures remains intact.
- The tracker excluding one-off payments is seen at 3.082% in Q4 2024 (vs 3.024% in the April iteration). The ECB projects compensation per employee growth at 2.8% by the last quarter of this year, down from 3.8% in Q1.
- There were also upward revisions to the share of employees covered by the wage tracker (45% in Q4 2025 vs 43% in April).
- From the ECB: “The downward trend of the forward-looking wage tracker for the remainder of 2025 partly reflects the mechanical impact of large one-off payments (that were paid in 2024 but drop out in 2025) and the front-loaded nature of wage increases in some sectors in 2024.”
- Little impact in ECB implied rates following the release, as expected.
FOREX: FX OPTION EXPIRY - Some attention on the EUR and Yen
Bringing your attention to Monday and the Yen Expiry size.
Of note:
EURUSD 2.31bn at 1.1400 (could act as magnet, although the US CPI will determine the move in the spot before expiry at 15.00BST/10.00ET).
USDJPY 1.11bn at 145.00.
EURUSD 1.11bn at 1.1400 (thu).
EURUSD 1.37bn at 1.1400 (fri).
EURUSD 1.25bn at 1.1400 (mon).
USDJPY 4.57bn at 145.00 (mon).
- EURUSD: 1.1400 (2.31bn), 1.1500 (836mln).
- GBPUSD: 1.3450 (758mln).
- USDJPY: 145.00 (1.11bn).
- AUDUSD: 0.6495 (400mln), 0.6500 (346mln).
- AUDNZD: 1.0800 (300mln).
GERMAN AUCTION PREVIEW: On offer next week
Germany has announced it will be looking to sell the following at its auction next Tuesday, June 17:
- E1bln of the 2.10% Apr-29 Green Bobl (ISIN: DE000BU35025)
- E500mln of the 2.30% Feb-33 Green Bund (ISIN: DE000BU3Z005)
