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(M2) Outlook Remains Bearish


(M2) Trend Needle Still Points South


(M2) Corrective Bounce


Won Leads Losses, Yuan & Peso Hold Firm

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China Repo Rates Jump


Mixed performance in a data heavy session, liquidity was thinner than usual with market holidays in the US and UK.

  • INDIA: Bonds lower in early trade, yields were already under pressure after last week's auctions had to be rescued by primary dealers again. On Friday the finance minister said that India will need to borrow more in order to compensate regional governments, confirming a sources piece earlier in the week. An additional INR 1.58tn will be added to supply for this fiscal year, bringing total borrowing to INR 13.8tn. Markets look ahead to GDP figures later in the session.
  • SOUTH KOREA: Futures in South Korea are sharply lower, 10-year down around 37 ticks having declined from the open. Data earlier showed South Korea's industrial output fell 1.6% M/M against estimates of a 0.4% increase. The figure denoted the biggest decline in 11 months, though the Y/Y figure was above estimates thanks to a low base effect. South Korea reported 430 daily new coronavirus Monday, in the 400s for the second consecutive day partly due to fewer tests over the weekend. The MOF sold KRW 3.5tn 30-year debt, demand slipped slightly from the previous auction but was in line with recent averages.
  • CHINA: Repo rates rose in China, the overnight repo rate hitting 2.3543%, the highest since January, while the 7-day repo rate rose as high at 2.90%. There were reports that the PBOC may increase liquidity injection through daily reverse repos in June if market rates rise as local government special bond issuances peak and rising PPI fuel tightening expectation. Futures in China rose as equity markets came under pressure. May manufacturing PMI missed estimates at 51.0, which was slower than April's expansion, while non-manufacturing PMI rose to 55.2.
  • INDONESIA: Yields lower across the curve with some bull steepening seen. A quiet session on the domestic headline front, there were reports that Indonesia and the US are to have wide ranging discussions with the US on a number of partnerships as well as geopolitical issues. Markets look ahead to PMI and CPI data during tomorrow's session.

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