Asia Sovs Tracks US Tsys, BI Unchanged, PH President's Approval Falls

Asian EM sovs yields are flat to 2bps higher and largely track moves in the US Tsys markets with slightly better selling through the belly of the curves. Local currency Philippines debt has outperformed Indonesian debt recently with the divergence in central bank policies with BSP on track for a rate cut as early as August, while fiscal deficit and currency concerns weigh on Indonesian bonds, BI kept rates on hold on Wednesday.

• Philippines inflation continues to fall and now sits at 3.9% from a peak of nearly 9% early last year, while concerns grow over increased planned spending by President-elect Prabowo Subianto’s administration with some reports they are considering scrapping a ceiling on the deficit are adding to market jitters.
• Bank Indonesia opted to keep its benchmark rate steady at 6.25%, alongside unchanged rates for its overnight deposit facility and lending facility. The decision reflects the central bank's focus on maintaining inflation within a target range of 1.5% to 3.5% and stabilizing the rupiah through exchange-rate stabilization measures. Growth forecasts for Indonesia in 2024 are estimated between 4.7% and 5.5%, supported primarily by robust domestic demand.
• Front-end yields have tighten about 2bps verses US Tsys, while the US-ID 10yr spread has widen 1bps, US-PH 10yr spread is little changed.
• In local politics, Philippine President Ferdinand Marcos Jr.'s approval rating declined slightly in June, to 53%. This comes amid a political rift following Vice President Sara Duterte's resignation, despite her approval rating rising to 69%. The survey highlights tensions within their political alliance and sets the stage for a potential electoral contest between the Marcos and Duterte families in 2025.
• Cross-asset: In FX markets the BBDXY is steady while the IDR has slipped a touch this morning to 16,158 down 0.35%, while the PHP has strengthen a touch, up 0.05% to 58.293. Global tech stocks have been hit recently as trade restrictions and geopolitical tension rise, both the JCI up 1% & PSEi down 0.10 look to have missed this sell-off largely due to their small reliance on tech companies in their indices.
• Looking ahead, Philippines has BoP Overall on Friday.