EM ASIA CREDIT: Supply Update: Rizal Bank prices long 5yr $ bond overnight

Heavy outflows from the tech heavy markets on Friday, with Taiwan seeing its largest outflow since June. Philippines has seen 8 straight sessions of outflows while Indonesia has seen 7 straight sessions of outflows. 

• South Korea: Recorded outflows of -$625m Friday, with a 5-day total of -$1.61b. YTD flows remain positive at +$2.22b. The 5-day average is -$322m, worse than the 20-day average of -$160m and the 100-day average of -$165m.
• Taiwan: Saw significant outflows of -$1.78b Friday, contributing to a 5-day total of -$2.24b. YTD flows remain deeply negative at -$19.56b. The 5-day average is -$448m, worse than the 20-day average of -$175m and the 100-day average of -$139m.
• India: Posted outflows of -$93m Thursday, with a 5-day total of -$114m. YTD flows remain positive at +$615m. The 5-day average is -$23m, worse than the 20-day average of +$158m but better than the 100-day average of -$43m.
• Indonesia: Recorded outflows of -$26m Friday, with a 5-day total of -$253m. YTD flows remain positive at +$1.11b. The 5-day average is -$51m, worse than the 20-day average of -$31m but better than the 100-day average of +$11m.
• Thailand: Registered outflows of -$62m Friday, with a 5-day total of -$124m. YTD flows are negative at -$4.16b. The 5-day average is -$25m, worse than the 20-day average of -$22m and the 100-day average of -$9m.
• Malaysia: Experienced outflows of -$52m Friday, with a 5-day total of -$238m. YTD flows are negative at -$913m. The 5-day average is -$48m, better than the 20-day average of -$55m but worse than the 100-day average of -$10m.
• Philippines: Posted outflows of -$13m Friday, with a 5-day total of -$70m. YTD flows remain negative at -$412m. The 5-day average is -$14m, worse than the 20-day average of -$9m and the 100-day average of +$1m.

Table 1: EM Asia Equity Flows

• The S&P 500 Value Index has significantly under-performed the wider Index recently, S&P up 26.44% for the year vs the Value Index which is up just 13.48%, the Growth Index is up 37.70% for the same period.
• The S&P Value Index ended 14 straight session of selling on Friday, with the Index bouncing off the 200-day SMA.

Chart. S&P Value Bounces Off 200-day EMA

• Tsys futures gave back a large portion of Friday's gains, however yields closed lower for the session. Front-end tsys under performed across the curve, re-flattening the curves from its widest levels of the day. Most gains were seen over the US morning session after November PCE data printed below estimates across both headline and core readings.
• TU closed  +0-00⅜ at 102-22+, while TY closed +0-11+ at 108-31, where we currently trade this morning.
• Core PCE inflation was slightly softer than expected but still solid trend rates for supercore inflation appear to have helped anchor Fed rate expectations with markets only willing to pare so much of Wednesday’s reaction to a hawkish Fed.
• Cash tsys curves saw the 2s7s30s fly drop 8.3bps as the belly of the curves outperformed throughout the session. The 2yr closed -0.6bps at 4.31%, 7yr closed -5.5bps at 4.45%, 10yr closed -4.1bps at 4.522%. The 2s10s curve flattened -3.3bps to 20.772.
• The US has avoided a government shutdown, with the bill gaining enough votes to pass. The pill will now give the US enough funding through to March 14. Bill also provides billions for disaster relief and gives economic aid to farmers, however it does not include a suspension of the US debt limit, which President-elect Donald Trump sought
• In Treasury options, flows included A large options trade targeting a rise in US 10yr Treasury yields to around 5.4% by January 24 saw 50,000 February 103.00 puts bought for approximately $1.5m. This appears to be new risk, given the low prior open interest of 7,036 contracts at this strike. While in SOFR futures stand out flows included a large block sale in the Dec25 futures over the US morning session
• Later today we have durable goods orders and new home sales