PHP: USD/PHP Back Under 57.00, Recent Ranges Holding
Sep-05 02:33
USD/PHP sits near 56.90/95 in latest dealings, down around 0.20% from end Thursday levels. This puts the pair back under all key EMAs, although these support/resistance points haven't been strong inflection points for the market of late. Recent highs in the pair rest just above 57.50, while late August lows were at 56.67.
- Even with these reasonably ranges over recent weeks, USD/PHP 1 month implied vol has been relatively steady, last near 6.18%, mid range for recent months.
- Earlier data showed August CPI a touch above market expectations, but still below target (headline was 1.5%y/y). BSP stated after the print, "*PHILIPPINES INFLATION SEEN AVERAGING BELOW TARGET IN 2025: BSP,*PHILIPPINES INFLATION OUTLOOK BROADLY UNCHANGED: BSP *PHILIPPINES INFLATION SEEN TRENDING HIGHER IN 2026, 2027: BSP" (via BBG)
- The next policy meeting is a little over a month away on Oct 9. We do get another CPI print before then. BSP Governor has left the door ajar for another cut this year, but noted last week, "the BSP may stand pat on its benchmark interest rate for the remainder of the year if prices remain cool and domestic demand holds, noting that the nation has reached its sweet spot for inflation and output growth." (via BBG)
- USD/PHP is likely seeing some benefit from lower real US yields. The 10yr getting to 1.79% on Thursday, lows back to April of this year. Local equities are higher in early dealings today, the PCOMP up around 0.80%, but the local markets has struggled in recent weeks, only moving up recent from multi month lows.
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AUSSIE BONDS: Little Changed On A Subdued Data-Light Session
Aug-06 02:24
ACGBs (YM -0.5 & XM -1.0) are little changed on a data-light session.
- Cash US tsys are flat to 1bp cheaper, with a steepening bias, in today's Asia-Pac session after yesterday's twist-flattener.
- Cash ACGBs are 1bp cheaper with the AU-US 10-year yield differential at +2bps.
- The latest ACGB Mar-36 auction saw strong demand, with the weighted average yield coming in 0.21bps through prevailing mid-yields, according to Yieldbroker, continuing the trend of firm pricing at recent ACGB auctions. However, the cover ratio collapsed to 3.3111x from 4.45x.A$1000mn of the 3.00% 21 November 2033 bond is planned for Friday.
- The bills strip is weaker, with pricing -1 to -3.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in August is given a 100% probability, with a cumulative 63bps of easing priced by year-end (based on an effective cash rate of 3.84%).
BOJ: Rinban Purchase Offer
Aug-06 02:17
The BoJ offers to buy a total of Y885bn of JGBs from the market:
- Y100bn worth of JGBs with <1 Year until maturity
- Y325bn worth of JGBs with 1-3 Years until maturity
- Y325bn worth of JGBs with 3-5 Years until maturity
- Y135bn worth of JGBs with 10-25 Years until maturity
JGBS: Twist-Flattener, Real Wages Moved In Right Direction
Aug-06 02:14
At the Tokyo lunch break, JGB futures are weaker, -12 compared to settlement levels.
- (MNI) Japan’s inflation-adjusted real wage, a key gauge of household purchasing power, remained in negative territory for a sixth consecutive month in June but narrowed to -1.3% from May’s 2.6% decline, preliminary data from the Ministry of Health, Labour and Welfare showed Wednesday.
- Bank of Japan Governor Kazuo Ueda said last week he expects real wages to improve toward the end of the year, though it remains difficult to predict when they will turn positive. The sharp wage increases agreed during spring negotiations are gradually being reflected in wage data through July, helping to reduce the negative real wage gap.
- Cash US tsys are flat to 1bp cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s twist-flattener.
- Cash JGBs are slightly mixed across benchmarks, with a flattening bias. The benchmark 10-year yield is 0.5bp higher at 1.477% versus the cycle high of 1.616%.
- Swaps have also twist-flattened, with rates1bp higher to2bps lower. Swap spreads are mixed.
