ASIA FX: THB, MYR Outperform, Steadier Trends Elsewhere
Jan-22 05:01
South East Asia currencies have been mixed, with MYR and THB recording solid gains. Trends elsewhere have been steadier, or slightly more in favour of the USD. Sentiment has once again been impacted by tariff threats from US President Trump, although aggregate moves have been modest. Regional equity markets are mostly higher.
- USD/MYR has fallen to sub 4.4450, fresh YTD lows for the pair. Earlier Dec lows rested around 4.4125, which could present as a further downside target. MYR is outperforming the modest weakness seen in the yuan so far today. Direct catalysts for this MYR aren't apparent. We have the BNM later today, which is expected to see rates left on hold. The Malaysian authorities view the MYR as undervalued, so today's move is consistent with removing some of that valuation gap.
- USD/THB is also down sharply, the pair last under 33.90. Baht has been an outperformer over the past week. Strength in gold prices will be providing a positive spill over, while net inflows have been more positive relative to equity flows in the past week. Tourism anecdotes/high frequency data points also appear positive. Local authorities are noting solid y/y momentum for early 2025 tourist arrivals.
- USD/IDR is little changed, last around 16325/30, so slightly off recent highs. It's a similar backdrop for INR, last near 86.55 versus the USD.
- USD/SGD is off session highs, last under 1.3550. Tomorrow, we have the CPI print ahead of Friday's MAS policy meeting outcome, which is projected to be a close call in terms of no change versus fresh easing.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BONDS: NZGBs Close Richer As Curve Bull-Flattens
Dec-23 04:49
NZGBs have closed richer today, outperforming the move made on Friday in US tsys. In has been a very slow session
- New Zealand’s Treasury Department acknowledges a deeper-than-expected economic downturn but remains optimistic about a recovery beginning in early 2025, as highlighted in its Fortnightly Economic Update. Indicators such as improving consumer and business confidence, easing inflationary pressures, and higher card spending suggest the worst may be over. However, they caution that future GDP revisions could remain larger than usual.
- NZ's residential mortgage lending in November totaled NZ$7.41b, up 13% y/y but down 4% m/m after seasonal adjustment. First-home buyers accounted for NZ$1.5b (20.2% of total), a 3.7% annual decline, while investors borrowed NZ$1.6b, up 41% y/y. The number of new mortgage commitments fell 1.5% m/m to 18,981.
- US Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
- NZGBs curve has bull-flattened today, the 2yr is -2.8bps and trades at yearly lows, while the 10yr is -8.4bps at 4.446%. The 3s10s is +0.5bps at trades at its steepest level this year.
- RBNZ dated OIS is pricing is little changed today with 54.7bps of cuts for the Feb meeting, and 100bps of cumulative cuts are now priced in by May. There is a cumulative 124bps of cuts priced in through to October 2025.
- There is no further data out for New Zealand this year.
JGBS: Futures Drift A Touch Lower, JGB Yields Unchanged
Dec-23 04:44
JGB futures have had a slightly downside bias since the lunchtime break, but overall moves remain contained. The March contract (JBH5) last 142.42, -.05 versus settlement levels. US Tsy futures have been relatively steady today as market wind down for the holiday period later this week.
- Cash JGB yields are little changed, the 10yr remaining just under 1.07% at this stage. The 10yr swap rate is around 1.015%, also little changed for the session. Aggregate moves are less than 1bps across keys parts of the JGB curve and swap rate space.
- We do have some BoJ and data event risks this week, the mins of the BoJ Oct meeting are out tomorrow, services PPI on Wednesday (Christmas day), along with a Ueda speech. On Friday the Tokyo CPI for Dec prints.
- It remains to be seen if these events shift market sentiment, as the central bank awaits January trends on wages (for 2025), along with early US policy shifts (under the returning Trump administration).
US TSYS: Tsys Futures Steady, 10yr Hovers Near 4.50%
Dec-23 04:39
- Tsys futures are trading little changed today, ranges are narrow while volumes are slightly below average. TU is +00¼ at 102-22¾, while TY is trading +00 + at 108-31+.
- Cash tsys are trading +/- 0.5bps, curve slightly flatter. The 10yr hovers just above the 4.50% level at 4.52%.
- Traders are betting yields will continue to rise, taking at look at TLT (iShares 20+yr Treasury Bond) Etf, investors withdrew a net $1.55b from it in the last session for which data is available, reducing the fund's assets by 2.9% to $51.1b, the lowest level since June 21. This was the biggest one-day decrease in at least a year. The most active option for the Jan 15 expiry is the 85 put, we last trade at 88.31.
- In Treasury options on friday, 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 sale
