EM CEEMEA CREDIT: Yapi Kredi Bank: 2Q 25 Results – Credit Neutral

On BoE QT, HSBC note that “to maintain an overall pace of GBP100bn, active sales would need to accelerate to GBP51bn next year - up from GBP13bn in 2024/25. Since the steady state (balance sheet) size is approaching, there is a case for a smaller envelope. However, given the Bank’s past behaviour and long-term objectives, we think the pace of QT will be maintained, but sales will be skewed towards shorter maturities to limit the tightening of financial conditions via increased term premium, which mostly impacts longer bonds”.

• They suggest “this would provide increased support for the long end. The extent of any curve flattening would depend upon other factors such as rate cut expectations, fiscal concerns, and any supply response. ASW spreads are also subject to conflicting forces, but a further shift in the cash-collateral balance adds cheapening pressure”.

• Broader highs for the Yen versus the USD, EUR and GBP, but the Aussie lags for now.
• The bid in US Treasuries is the driver here, helping drag EGBs higher.
• US 10yr Yield look to test the 4.1942% support, just 1.5 ticks away in futures.

Further out for the US 10yr Yield:

• 4.15% = 112.19+.
• 4.10% = 112.30.

Next immediate support in the USDJPY is still at 142.80.

• "I'll give you three things that are very much on my mind in terms of priorities for the surveillance internationally and domestically. One is the much the much greater leverage in the non bank sector, the huge change in intermediation markets and take on bond markets. Now we've had some interesting tests of this in the last couple of few months, so we've a lot to learn from that. What have we learned? What have we learned about resilience, fragility?"
• "The second one is, I think we do need to lift the lid on the private asset, private equity, private credit world, not because I'm saying there's a sort of there's a massive problem staring us in the face. It's too opaque at the moment. So understanding the lie of the land, the vulnerability, vulnerabilities the strengths."
• "The third one is the is it obviously, the big shift now towards, you know the potential growth of stable coins and what the implications say you know if you have to push me to late list tree there they are."