EM ASIA CREDIT: PTT Public Co. (PTTTB, Baa1/BBB+/BBB+ ) looks to start US talks

In Tokyo morning trade, JGB futures are weaker, -24 compared to settlement levels, but sitting near the middle of today’s range.

• "BOJ Officials see little need to change their gradual rate hike stance despite US trade uncertainties, " people familiar said. They are considering cutting inflation forecasts due to a stronger yen and cheaper oil." (per BBG)
• Prime minister Ishiba Shigeru stated the government will do everything in its power to provide support to small and medium sized businesses affected by the US tariffs.
• Regarding tariff negotiations, he expressed the view that US President Trump places the highest priority on eliminating trade deficits with countries around the world, including Japan.
• Regarding non-tariff barriers on automobiles, about which the US side has expressed dissatisfaction, he said, " we will work things out properly so that they are not described as unfair," indicating his intention to consider how to respond. (per BBG)
• Cash US tsys are slightly mixed, with a flattening bias, in today’s Asia-Pac session after yesterday’s long-end sell-off.
• Cash JGBs are 1- 4 bps cheaper across benchmarks, with the belly leading. The benchmark 10-year yield is 3.3bps higher at 1.318% versus the cycle high of 1.596%.
• Swap rates are 1- 2 bps higher. Swap spreads are mixed.

The AUD moved back higher once again on Monday and broke the important 0.6400 area as the market rushed to reinstate USD shorts after disappointment on trade deals and Trump’s comments regarding Powell. Australia has started early voting ahead of the National election, according to Bloomberg polls show Labor holding a narrow lead. For the moment the capitulation of the USD is the consensus trade, while this is the case the AUD will find buyers on dips. This will only change once the market starts realising what this means for Global Growth and what that might imply for China.

• EUR/AUD - Overnight range 1.7900 - 1.7999. Asia opens in the middle of Mondays range but it looks to have built a base around 1.77/178 from which to test higher again.
• GBP/AUD - Overnight range 2.0821 - 2.0887, GBP/AUD continues to consolidate having found demand once again back toward 2.0700. Asia opens in the middle of Monday's range as the pair looks to form a base around 2.06/07 from which to again push higher.
• AUD/JPY - Overnight range 90.05 - 90.65, Asia is trading sideways as the market tries to digest the fresh uncertainties dished up by Trump. Support towards 90.00 continues to hold for now, a break through here and the downward trend could be reinstated.
• AUD/NZD -  Overnight range 1.0678 - 1.0703, the cross is dealing in Asia around 1.0700 with very little direction. The cross continues to trade heavy as the NZD shorts find less liquidity as they start to reduce positioning.

Fig 1: GBP/AUD spot Hourly Chart

Source: MNI - Market News/Bloomberg

Early G10 FX trends are skewed modestly in favor of the USD, unwinding some of Monday's shifts, albeit only marginally at this stage. The USD BBDXY was last up a little over 0.15%, to be close to 1218.25. A firmer US equity futures backdrop since the open is aiding USD sentiment, particularly against the safe havens. 

• The USD BBDXY index is still close to intra-session lows from Monday near 1212, which was fresh lows in the index back to end 2023.
• Eminis and Nasdaq futures are up around 0.30-35% at this stage, but this follows cash losses from Monday trade of more than 2%. Concern around Fed independence weighed notably.
• USD/JPY has risen back above 141.10 in latest dealings, with Monday lows just under 140.50. EUR/USD is down to 1.1490, while USD/CHF is back above 0.8110, these currencies off around 0.20-0.30% versus the USD.
• US yields are mostly lower, with the 10yr back sub 4.40%, after Monday's sharp rise led by the back end of the curve.
• Japan FinMin Kato stated that he is heading to the US today for global meetings, and aims to meet with US Tsy Secretary Bessent and discuss FX.
• Elsewhere Economic Revitalization Minister Akazawa stated that Japan and the US are deciding the scope of trade talks (per BBG). This will remain a key focus point for markets.  
• NZD/USD is down around 0.30% as well, last near 0.5980/85, while AUD/USD is back close to 0.6400.
• We had NZ trade data earlier, with another trade surplus recorded, but NZD sentiment wasn't impacted.
• The data calendar is empty for the remainder of today's Asia Pac session.