THB: USD/THB Edges Higher, FinMin Sees Scope For Further Rate Cuts

At the Tokyo lunch break, JGB futures are stronger and hovering near session bests, +34 compared to the settlement levels.

• Today, the local calendar has been empty ahead of 2-year supply tomorrow.  
• Cash US tsys are little changed in today's Asia-Pac session.
• Cash JGBs are 3bps richer to 2bps cheaper across benchmarks, with the futures-linked 7-year outperforming. The benchmark 10-year yield is 2.4bps lower at 1.581% versus the cycle high of 1.616%.
• "Two-year JGB auctions typically pass under the radar, but Tuesday's will be spicier than usual as it lands ahead of a Bank of Japan meeting, which is set to deliver guidance on the next policy tightening." (BBG)
• We expect no policy changes at this week’s BOJ policy meeting. The market’s focus will be on the forecast changes in the BOJ’s Outlook Report and the tone of the Governor’s press conference regarding future rate hikes.
• Swap rates are 2bps lower to 1bp higher, with a steeper curve. Swap spreads are mixed.

China's industrial profits fell 4.3% y/y in June, following May’s 9.1% drop, while first-half profits decreased 1.8%, widening from the 1.1% decline in the first five months, China Securities Journal reported, citing data by National Bureau of Statistics on Sunday. Manufacturing profits rose 1.4% in June, reversing May’s decline of 4.1%, after promotional events accelerated car sales growth and boosted equipment manufacturing demand.

China needs further countercyclical policies in H2 to achieve the annual economic growth target, given pressure from tariffs, real estate and limited fiscal resources, according to a Q2 report by the China Finance 40 Forum (CF40). Authorities should fully utilise the funds transferred into the public budget to achieve the annual growth target for broad fiscal expenditure, as well as consider issuing an additional CNY2.3 trillion of government bonds, the report said. According to the current plan, CNY7.6 trillion can be issued from June to December, a lower amount compared to last year, the report noted.