AUSSIE BONDS: Subdued Pre-US Payrolls Session

USD/CNH is holding modestly lower in latest dealings, last near 7.2000, slightly up from session lows (7.1966). It is outperforming a slightly firmer USD trend against the majors (BBDXY index up close to 0.15%), as onshore China markets return from yesterday's long weekend. 

• We had the Caixin manufacturing PMI print a short while ago, which came in well below market forecasts (48.3, versus 50.7 expected). The points to the tariff impact, given the survey focuses on export orientated/small SMEs. In the middle of May we did see the US and China agree to lower tariff levels for 90 days.
• Firm focus remains on US-China trade talks, with the US side seemingly pushing for a Trump-XI call, but no confirmation yet that such a call will take place (we are likely to find out after the event in any case).
• The soft Caixin print hasn't impacted FX sentiment negatively though. Clear of month end flows from late last week may be helping sentiment at the margins.
• USD/CNH implied vols remain quite depressed, the 1 month last near 4.27%, just up from recent lows near 4%.
• The USD/CNY fixing earlier provided no fresh encouragement for yuan bills, as it was set comfortably above market consensus estimates. 

After an exceptional period of inflows into the major markets, it appears that this trend has stalled for now as constant daily flows are interrupted with outflows, with Taiwan and India the latest to experience a significant outflow.

• South Korea: Recorded inflows of +$172m yesterday, bringing the 5-day total to +$265m. 2025 to date flows are -$11,205. The 5-day average is +$53m, the 20-day average is +$53m and the 100-day average of -$112m.
• Taiwan: Had outflows of -$1,885m as yesterday, with total outflows of -$2,332m over the past 5 days. YTD flows are negative at -$12,778. The 5-day average is -$466m, the 20-day average of +$222m and the 100-day average of -$134m.
• India: Had outflows of -$585m as of the 30th, with total inflows of +$50m over the past 5 days.  YTD flows are negative -$10,528m.  The 5-day average is +$10m, the 20-day average of +$87m and the 100-day average of -$113m.
• Indonesia: Had outflows of -$172m as of yesterday, with total outflows of -$45m over the prior five days.  YTD flows are negative -$2,898m.  The 5-day average is -$9m, the 20-day average +$9m and the 100-day average -$31m.
• Thailand: Recorded outflows of -$47m as of 29th, outflows totaling -$84m over the past 5 days. YTD flows are negative at -$1,755m. The 5-day average is -$17m, the 20-day average of -$2m and the 100-day average of -$18m.
• Malaysia: Recorded outflows of -$107m as of the 30th, totaling -$240m over the past 5 days. YTD flows are negative at -$3,424m. The 5-day average is -$56m, the 20-day average of +$8m and the 100-day average of -$24m.
• Philippines: Saw inflows of +$8m yesterday, with net outflows of -$259m over the past 5 days. YTD flows are negative at -$515m. The 5-day average is -$52m, the 20-day average of -$13m the 100-day average of -$5m.

• China's May CAIXIN PMI contracted in May, surprising forecasters.
• May's result of +48.3 was materially down from +50.4 in March and a surprise to market survey's predicting a rise to +50.7
• May's result was the worst since Q3 2022.  
• Output fell sharply to +47.5 vis +51.6 in April for the lowest reading since late 2022 and new orders fell from the month prior.
• The outcome reverses seven consecutive months of expansion and speaks to the uncertainty created from the US-China trade war.