SOUTH KOREA: MNI Publishes Election Briefing
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South Korea holds a snap presidential election on Tuesday, 3 June, two years ahead of schedule. The election takes place at a time of heightened political, security, and economic tensions for South Korea, with two strongly opposing views of the country’s future offered by the main candidates. Under the presidency of Yoon Suk-yeol, South Korea moved to significantly bolster relations with the US and Japan as a bulwark against China in the region. The outcome of this election could see a moderation in this stance should the defeated 2022 candidate Lee Jae-myung win, or an acceleration under foreign policy hawk Kim Moon-soo.
In this briefing, we offer scenario analysis of the most likely election outcomes, with assigned probabilities. The briefing also contains a short explanation on how South Korean presidential elections work and how the course of the election should progress on election night, information on the main candidates contesting the vote, and an opinion polling and betting market chartpack.
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PIPELINE: Corporate Bond Roundup: $1B CoE Launched, IADB, NIB, Bahrain on Tap
- Date $MM Issuer (Priced *, Launch #)
- 04/30 $1B #CoE Dev Bank 3Y SOFR+36
- 04/30 $Benchmark IADB 5Y SOFR+44
- 04/30 $Benchmark Nordic Investment Bank 5Y SOFR+43
- 04/30 $Benchmark Bahrain 12Y 7.75%a, 8Y Sukuk 6.625%a
- $22.95B Priced Tuesday, $40.175B/wk
EUROPEAN INFLATION: MNI Projects 2.1-2.2% Y/Y National-Level German CPI
From state-level data that equates to 89.1% weighting of the national April flash German CPI print (due at 13:00 GMT / 14:00 CET), MNI estimates that national CPI (non-HICP print) rose by around 0.4% M/M (prior 0.3%) and rose 2.1-2.2% Y/Y (prior 2.2%). See the tables below for full calculations.
- Analyst consensus stands at 2.0% Y/Y and 0.3% M/M, so our tracking indicates some upside risks to headline inflation. That would mirror firmer-than expected April prints from Spain and France earlier. Italy meanwhile printed lower than consensus.
- Current tracking of Core CPI (ex-energy and food, based on 50% of the national index) implies broadly around 2.9% (2.6% in March) and 0.5% M/M (0.6% Mar).
- We will provide a follow-up bullet looking at underlying drivers in due course.
- Note: These estimates are in relation to the national CPI print, not the HICP print which feeds into the Eurozone HICP print that the ECB targets. The magnitude of surprises to consensus can sometimes be different due to the different methodologies and weights used in national CPI vs HICP - but the direction of the surprise is normally the same.
| Y/Y | April (Reported) | March (Reported) | Difference |
| North Rhine Westphalia | 1.8 | 1.9 | -0.1 |
| Hesse | 2.3 | 2.4 | -0.1 |
| Bavaria | 2.1 | 2.3 | -0.2 |
| Brandenburg | 2.2 | 2.3 | -0.1 |
| Baden Wuert. | 2.4 | 2.2 | 0.2 |
| Berlin | 1.9 | 1.9 | 0.0 |
| Saxony | 2.4 | 2.5 | -0.1 |
| Rhineland-Palatinate | 1.9 | 2.0 | -0.1 |
| Lower Saxony | 2.2 | 2.4 | -0.2 |
| Saarland | 1.9 | 2.0 | -0.1 |
| Saxony-Anhalt | 2.9 | 2.9 | 0.0 |
| Weighted average: | 2.11% | for | 89.1% |
| M/M | April (Reported) | March (Reported) | Difference |
| North Rhine Westphalia | 0.4 | 0.3 | 0.1 |
| Hesse | 0.5 | 0.4 | 0.1 |
| Bavaria | 0.4 | 0.3 | 0.1 |
| Brandenburg | 0.4 | 0.4 | 0.0 |
| Baden Wuert. | 0.5 | 0.2 | 0.3 |
| Berlin | 0.3 | 0.6 | -0.3 |
| Saxony | 0.5 | 0.6 | -0.1 |
| Rhineland-Palatinate | 0.4 | 0.2 | 0.2 |
| Lower Saxony | 0.3 | 0.3 | 0.0 |
| Saarland | 0.0 | 0.2 | -0.2 |
| Saxony-Anhalt | 0.5 | 0.7 | -0.2 |
| Weighted average: | 0.43% | for | 89.1% |
OUTLOOK: Price Signal Summary - Bear Threat In WTI Remains Present
- On the commodity front, Gold is unchanged and the yellow metal continues to trade below its recent highs. The trend needle points north and the latest move down appears corrective. The retracement has allowed an overbought condition to unwind. Moving average studies are in a bull-mode position highlighting a dominant uptrend. The next objective is $3547.9, the 1.764 projection of the Feb 28 - Apr 3 - Apr 7 price swing. Initial firm support to watch lies at 3239.5, the 20-day EMA.
- In the oil space, a medium-term bearish theme in WTI futures remains intact and the latest move down reinforces this theme, signalling the end of the correction between Apr 9 - 23. The correction allowed an oversold trend condition to unwind. A clear resumption of the bear cycle would open $53.72, the 2.236 projection of the Feb 20 - Mar 5 - Apr 2 price swing. Initial support to watch is at $58.29, the Apr 29 low. Resistance to watch is $65.38, the 50-day EMA.
