AUSSIE BONDS: Modestly Richer,

Ahead of a Potentially Volatile Period as the tariff deadline approaches, outflows were strong across major bourses. 

• South Korea: Recorded inflows of +$29m yesterday, bringing the 5-day total to +$185m. 2025 to date flows are -$9,183. The 5-day average is +$37m, the 20-day average is -$22m and the 100-day average of -$80m.
• Taiwan: Had outflows of -$210m yesterday, with total inflows of +$2,704 m over the past 5 days. YTD flows are negative at -$3,225. The 5-day average is +$541m, the 20-day average of +$469m and the 100-day average of -$6m.
• India: Had inflows of +$81m as of the 4th, with total outflows of -$85m over the past 5 days.  YTD flows are negative -$8,337m.  The 5-day average is -$17m, the 20-day average of +$124m and the 100-day average of +$1m.
• Indonesia: Had outflows of -$36m  yesterday, with total outflows of -$186m over the prior five days.  YTD flows are negative -$3,423m.  The 5-day average is -$37m, the 20-day average -$23m and the 100-day average -$32m.
• Thailand: Recorded inflows of +$18m yesterday, with outflows totaling -$101m over the past 5 days. YTD flows are negative at -$2,438m. The 5-day average is -$20m, the 20-day average of -$13m and the 100-day average of -$21m.
• Malaysia: Recorded outflows as of -$64m yesterday, totaling -$8m over the past 5 days. YTD flows are negative at -$2,735m. The 5-day average is -$2m, the 20-day average of -$11m and the 100-day average of -$20m.
• Philippines: Recorded inflows of +$2m yesterday, with net inflows of +$49m over the past 5 days. YTD flows are negative at -$546m. The 5-day average is +$10m, the 20-day average of -$2m the 100-day average of -$5m.

The BBDXY range overnight was 1192.75 - 1198.36, Asia is currently trading around 1195. The BBDXY had a decent bounce higher yesterday and unlike the price action over the NFP it has held onto most of its gains. We have danced this dance before and the USD has most recently failed to follow through. The market is short and vulnerable to a correction but is still quite away from pressure points. The larger picture remains one of USD weakness and in the current environment rallies should continue to be met with supply, first resistance is back towards the 1205/1215 area, a sustained break above 1220 would be needed to begin challenging the shorts conviction, that does look a long way off for now.

• Insight Investment - US Exceptionalism At A Crossroads:” While the US has historically leveraged structural advantages and innovation to maintain global economic leadership, recent policy shifts under the Trump administration, marked by increased volatility, trade restrictions, tighter immigration, and potential R&D funding cuts, threaten to erode the foundations of US exceptionalism. These changes risk disrupting the virtuous cycle of growth, investment, and innovation that has long underpinned US dominance.”
• (Bloomberg) - “Monday’s strength in the dollar is likely to be short-lived. Emerging-market currencies have been getting routed all day, and that’s keeping the dollar higher, but when the dust settles we may see the greenback fade against G10 FX.”
• Barchart on X: “U.S. Dollar Index DXY is now trading below its 200 Day Moving Average by the largest margin in 21 years”. See Graph below.
• There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows. This consensus will also result in some decent short squeezes as a lot of the market is positioned the same way.
• Data/Events :  NFIB Small Business Optimism

Fig 1: Spread Of DXY Over Its 200 MA

Source: MNI/@Barchart/Bloomberg

• CHINA PBOC CONDUCTS CNY69 BLN VIA 7-DAY REVERSE REPO TUES