EM ASIA CREDIT: SK Telecom: Q2 earnings out

In Tokyo morning trade, JGB futures are weaker, -12 compared to settlement levels.

• Japan May labor cash earnings were weaker than forecast. Headline nominal cash earnings rose 1.0%y/y, versus a 2.4% forecast. The prior April outcome was also revised down to a 2.0% rise (initially reported as a 2.3 % gain). In real terms, earnings were down -2.9%y/y, against a -1.7% forecast and prior -2.0% outcome. For nominal earnings this is the weakest outcome since Mar 2024, while in real terms, it is back to Sep 2023 lows.
• (Bloomberg) Despite weak real wages, underlying wage trends remain strong, keeping the Bank of Japan on a path of considering further interest rate hikes, with wage momentum expected to remain strong following robust spring wage negotiations.
• (Bloomberg) The Bank of Japan is likely to maintain its view that underlying inflation is moving closer to its 2% target, and may raise rates by 25 basis points at its July 30-31 meeting.
• Cash US tsys are flat to 3bps richer in today’s Asia-Pac session after resuming trading following the long weekend.
• Cash JGBs are flat to 4bps cheaper across benchmarks, with a steeper curve. The benchmark 5-year yield is 0.9bp higher at 0.980% versus the cycle high of 1.596%.
• The swaps curve has bear-steepened, with rates 1-4bps higher. Swap spreads are generally tighter.

• The PBOC issued CNY106.5 bn of 7-day reverse repo at 1.4% during this morning's operations.
• Today's maturities CNY331.5 bn
• Net liquidity withdraws CNY225bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.40%, from prior close of 1.42%.
• The China overnight interbank repo rate is at 1.30%, from the prior close of 1.30%.
• The China 7-day interbank repo rate is at 1.40%, from the prior close of 1.33%.

The USD/CNY fix printed at 7.1506, against a Bloomberg market consensus of 7.1656.

• Today's fix was a fresh low back to Nov last year. This comes despite some steadiness in terms of USD indices in recent sessions. The fixing error was little changed from Friday's outcome, printing at -150pips.
• USD/CNH sits back under 7.1650 in latest dealings, little changed for the session. Broader USD sentiment is mixed, with higher beta plays underperforming amid lower US equity equities (as the tariff deadline approaches), but safe havens like yen are marginally firmer.