- The BOJ’s summary of opinions for the Oct 30-31 meeting revealed that some board members believed the central bank must carefully consider policy interest rate hikes despite the board's view that it would gradually increase the rate.
- JGB futures remain stronger, +6 compared to settlement levels, while yen has underperformed in the G10 FX space. Lower US Tsys futures has aided this move. Bitcoin hit a fresh record high.
- China equity dips have been supported. November’s early export numbers were quite weak in South Korea.
- There are no data in the US or Europe with Veterans/Remembrance Day observed in a number of countries. ECB’s McCaul speaks later.
MARKETS
- Tsys futures have continued to drift lower throughout the session, the long-end is underperforming, however still trades above Friday's lows, while the short-end has now broken below Friday's lows. TU was last -01⅜ at 102-23¼, TY is -08 at 110-01, while WN is -22 at 124-21.
- Looking at Dec'24 10yr futures technicals, a bear cycle remains in play following Wednesday's move lower reinforces current conditions. The recovery Thursday, above 110-00, is considered corrective. A resumption of the bear leg would open 109-05 next, the 76.4% retracement of the Apr - Sep bull cycle (cont). The 109-00 handle remains exposed too. Initial firm resistance is seen at 111-03+, the 20-day EMA.
- Cash trading is closed today for veterans day. The 10yr closed Friday at 4.304% about 17bps lower than the highs made on November 6th.
- There has been some decent unwinding of curve steepener trades over the past week, with the 2s10s flattening 14.5bps & the 2s30s flattening 18bps since the US election.
GLOBAL MARKET/OPINION: Financial Markets Reaction Post US Election
Almost a week has past since Trump has won the US Election, the "Trump Trades" have largely played out as expected. Focus will now largely turn to corporate earnings, with options pointing to limited upside heading into month-end.
- Bitcoin was seen as a favored asset under a Trump presidency, with significant inflows to ETF linked ETFs into leading into the election and a surge higher post Trump winning. The iShares Bitcoin Trust, has seen +$1.05b of inflows in the past week, well above the average weekly inflows of about $500m for the year and has now seen $5.52b for the past month.
- Bitcoin price is now trading above $81,000 for the first time ever having now rallied almost 17% since November 6th. The most popular strike for calls expiring on Nov 29 is $80,000 while December contracts clustered around $80,000 to $100,000 signally further upside could be ahead.
- Looking at sector tracking ETFs, Financials have seen the strongest inflows over the past week with XLF (Financial Select Sector SPDR) seeing $1.01b of inflows for the week and now trades up 5.76%. The ETF is currently trading at $49.19 and shows the $50 strike calls have the most open interest for the Nov 29th maturity while there is a 0.43 put/call ratio for the maturity. The energy sector was also expected to benefit from a Trump presidency, looking at the closely tracked XLE (Energy Select Sector SPDR) we saw a 4% jump in the ETF slightly outperforming the wider market, however options are pointing to limited upside with the $89.5 call strike having the most open interest, we last trade at $93.75 while flows have turned negative with a $140m outflow on Friday.
- Looking at major equity benchmarks, the small-cap focused Russell 2000 has gained 6.20%, verses the S&P 500 (+3.75%) and Nasdaq 100 (+4.40%). Investors are bullish on small caps, which performed well during Trump’s first term, averaging an 11% annual gain.
- Focus will turn to corporate earnings with with analysts expecting 3Q sales to increase only 0.1% y/y, this modest growth contrasts with the more robust earnings observed during Trump's first term, when the Russell 2000's quarterly sales grew at an average pace of 8.1% from late 2016 through the end of 2018. Despite this, small caps are seen as undervalued compared to large-cap stocks, creating potential for future outperformance.
- In the FX space, the top performing Asian EM currencies heading into the election were the THB (+9.20%) MYR (8.50%) IDR (+3.73%), however with Trump's focus on Tariffs and brining home manufacturing countries that rely heavily on exports to the US may see weakness in their currencies, the KRW has been the worst performing currencies post the election, trading -1.40%, while the TBH (-0.90%), both the PHP (+0.10%) and the IDR (+0.53%) are the only currencies higher. While in South America the MXN & ARS saw significant under performance since July 1, falling between 7-8% heading into the election. Post election the worst performing currency was the CLP which trades -1.80%, while the COP is the top performing, up 1.70%.
GLOBAL MACRO: Food Inflation Rising Due To Wide-Ranging Supply Issues
FAO global food prices rose 2% m/m in October to be up 5.5% y/y, the highest in over two years. This was the third straight monthly increase and the seventh in the last eight months. They had been disinflationary on a monthly basis for most of the last two years but that now appears to have turned.
Global inflation vs FAO food prices y/y%
- The rise in food prices over September/October has been broad-based with all FAO categories rising except meat. Vegetable oils rose the most in October up 7.3% m/m and 27.3% y/y driven by lower supply for palm, sunflower, soyoil and rapeseed oils.
- Cereals increased 0.8% m/m after 3.1% but prices still fell 8.3% y/y in October. With the monthly increases driven by wheat on concerns that EU, US & Russian harvests could be impacted by poor weather, while trouble in the Black Sea remains a problem.
- Rice fell 5.6% m/m in October due to a reduction in Indian rice quotations as competition is expected to rise after its export restriction removal. Processed and rough rice prices are down again in November to date, which is good news for Asian CPI inflation.
Non-Japan Asia ex China CPI y/y% vs cereals & rice prices y/y%
Source: MNI - Market News/Refinitiv
- Dairy prices are also rising robustly up 1.9% m/m and 21.4% y/y last month. European milk output is down due to seasonal factors but that has meant that it is struggling to meet external and internal demand for cheese and butter. Whereas strong production in Oceania has meant lower prices for milk powders, according to the FAO.
- Sugar prices rose 2.6% m/m after 10.9% but are still down 18.6% y/y. The recent increase is driven by concerns over Brazil’s harvest given the current drought. There has also been stronger demand for ethanol as Brent crude rose 3% m/m last month.
- Meat prices fell for the second straight month to be up 7.5% y/y.
JGBS: Cash Bonds Slightly Richer, BOJ SOO Cautious, PM Vote Due
JGB futures remain stronger, +6 compared to settlement levels, after dealing in a narrow range in today’s Tokyo session.
- The BOJ’s summary of opinions for the Oct 30-31 meeting revealed that some board members believed the central bank must carefully consider policy interest rate hikes despite the board's view that it would gradually increase the rate.
- Japan’s DPP will nominate its head Yuichiro Tamaki at the premiership vote after alleged marital infidelity. The party’s support for Tamaki means it is unlikely that Monday’s vote will select a new prime minister. (per BBG)
- Cash US tsys are closed today for the Veterans Day holiday. Nevertheless, US tsy futures (TYZ4) are dealing heavily at 110-01, down 0-08 from Friday's close.
- Cash JGBs are flat to 1bps across benchmarks. The benchmark 10-year yield is 0.3bp at 1.006%.
- The MOF’s auction of 10-year inflation-indexed bonds showed solid demand amid speculation that consumer prices will keep climbing. Bid-to-cover ratio for the sale of ¥250b of linkers maturing in March 2034 rose to 3.54 from 2.96 at the previous sale in August.
- Swap rates are flat to 2bps higher. Swap spreads are wider.
- Tomorrow, the local calendar will see M2 & M3 Money Stock and Machine Tool Orders data alongside BOJ Rinban operations covering 1-25-year OTR JGBs.
AUSSIE BONDS: Early Gains Given Up As TYZ4 Grinds Lower
ACGBs (YM -4.0 & XM -1.5) are weaker and near lows, having given up early gains on a data-light Sydney session.
- Cash US tsys are closed today for the Veterans Day holiday. Nevertheless, US tsy futures (TYZ4) are dealing heavily at 110-00, down 0-08+ from Friday's close. Fed speakers resume Tuesday in addition to the Senior Loan Officer Opinion Survey on Bank Lending Practices.
- The local calendar has been empty today, ahead of Consumer and Business Confidence tomorrow. The Q3 Wage Price Index is released on Wednesday followed by the Employment Report for October on Thursday.
- Cash ACGBs are 1-4bps cheaper with the AU-US 10-year yield differential at +28bps.
- Swap rates are 1-4bps higher, with the 3s10s curve flatter.
- The bills strip has bear-steepened, with pricing -1 to -5.
- RBA-dated OIS pricing is 1-4bps firmer today, with no easing by year-end. A 25bps rate cut is not fully priced until July.
- This week, the AOFM plans to sell A$800mn of the 2.50% 21 May 2030 bond on Wednesday and A$700mn of the 4.75% 21 April 2027 bond on Friday. It also plans to sell A$150mn of the Inflation-Linked 0.25% 21 November 2032 bond tomorrow.
NZGBS: Closed On Weak Note Despite Anchored Infl. Exps.
NZGBs closed with a modest bear-steepening, benchmark yields 1-3bps higher, after trading 2-3bps richer early in the session.
- Q4 inflation expectations from the RBNZ’s business survey showed that they remain well anchored close to the mid-point of the target band. 1-year out they moderated to 2.05% from 2.4% while 2-years out they were slightly higher at 2.1% from 2.0%. 1-year out has a 90% correlation with headline inflation and 78% with core, so the RBNZ should be assured that the former will stay in the band and that the latter should return soon. Another 50bp of easing is likely at its November 27 meeting.
- Cash US tsys are closed today for the Veterans Day holiday. Nevertheless, US tsy futures (TYZ4) are dealing heavily at 110-00, down 0-08+ from Friday's close. Fed speakers resume Tuesday in addition to the Senior Loan Officer Opinion Survey on Bank Lending Practices.
- Swap rates closed 1-2bps higher.
- RBNZ dated OIS pricing is flat to 4bps firmer across meetings, with July 2025 leading. A cumulative 92bps of easing is priced by February, with 53bps by year-end.
- Tomorrow, the local calendar will see Card Spending data, ahead of Migration data on Wednesday.
AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll
The latest Newspoll from The Australian is showing that the next federal election, which has to be held by 17 May 2025, is looking closer than it has since the last vote in 2022. It still seems a minority Labor government is the most likely outcome but if current trends continue that view becomes more uncertain. The two-party preferred measure is at 51% to 49% in favour of the opposition Coalition.
- The Coalition’s primary vote increased 2pp to 40% in the latest poll taken between November 4 and 8, the first time since the election and above its 35.7% recorded then. According to The Australian, a share at 40% or more makes it “competitive” at the next vote. One Nation appears to be losing support to the Coalition with it polling down 2pp to 5%, consistent with its result at the last election.
- Labor’s primary vote rose 2pp to 33% in the poll, in line with its share in the 2022 election. It seems to have made gains from the Greens and Others who both fell 1pp. The Greens are now down 1pp on its election outcome of 12.2%, while others & independents are 3.5pp lower.
- PM Albanese has been consistently seen as the better PM and while he still is, the gap with opposition leader Dutton has halved from 8pp in October to 4pp this month, narrowest since last election. Albanese was steady on 45% while Dutton rose 4pp to 41%.
- In terms of approval, Albanese’s net rating fell 1pp to -15, his worst since the election, while Dutton’s rose 3pp to -11 to be ahead. In general, respondents are not satisfied with either leader though.
NEW ZEALAND: Inflation Expectations Around Band Mid-Point
Q4 inflation expectations from the RBNZ’s business survey showed that they remain well anchored close to the mid-point of the target band. 1-year out they moderated to 2.05% from 2.4% while 2-years out they were slightly higher at 2.1% from 2.0%. 1-year out has a 90% correlation with headline inflation and 78% with core, so the RBNZ should be assured that the former will stay in the band and that the latter should return soon. Another 50bp of easing is likely at its November 27 meeting.
- RBNZ research found that household 1-year ahead inflation expectations had the best relationship with core. Our estimated correlation is higher for household than for business expectations at 85% versus 78%. Q4 household inflation expectations print on November 19.
- The business survey also includes the “perception of monetary conditions”, while they are expected to be less tight at the end of 2024 than they were at end-2023, they are still seen as tighter than end-2022. But by the end of 2025, they are perceived to be stimulatory.
NZ CPI vs RBNZ 1-year inflation expectations y/y%
FOREX: Safe Havens Underperform Amid Softer US Tsy Futures
The USD BBDXY index sits modestly higher, last near 1269.4, still comfortably within recent ranges. Yen is the weakest performer in Monday trade so far, off nearly 0.60% to 153.50/55.
- The bias in US Tsy futures has been lower, although much of the move took place in the first part of trade. 10yr futures are off -08, lending some support for the USD, particularly against the yen. CHF is also weaker off close to 0.20%.
- USD/JPY dipped modestly for Friday's session, so the first part of Monday trade is seeing some of this yen outperformance unwound. Earlier lows in the pair were at 152.64. Post US election highs were 154.71, so we still have distance to close that gap.
- There has been no cash Tsy trading due to the US holiday later, while news flow has been light. Other Trump related trades have also been solid, with Bitcoin rising to a fresh record high.
- We had the BoJ Summary of Opinions earlier, which showed a wide variety of viewpoints. In sum, a cautious approach to further rate hikes is likely.
- AUD/USD is up a touch but still under 0.6600. The regional equity tone is mostly negative, with HK markets the worst performers. Disappointment around China's stimulus announcement from late on Friday likely carrying over. AUD/JPY is up to 101.10/15, but sub recent highs of 102.405.
- NZD/USD has crept higher, last near 0.5970/75. Q4 inflation expectations from the RBNZ’s business survey showed that they remain well anchored close to the mid-point of the target band. 1-year out they moderated to 2.05% from 2.4% while 2-years out they were slightly higher at 2.1% from 2.0%. The Kiwi rose modestly on the data, but there was no follow through.
- There are no data in the US or Europe with Veterans/Remembrance Day observed in a number of countries. ECB’s McCaul speaks later.
EQUITIES: Chinese & Hong Kong Equities Mostly Lower, Property Underperforming
Chinese equities are mostly lower today, reflecting disappointment from last week's NPC meeting. The CSI 300 Index dropped 0.2%, with consumer staples, Real estate and energy stocks leading declines, although there have been strong gains made in Tech stocks. Hong Kong listed equities have significantly underperformed today with the HSI -2.20%, while HS China Enterprise Index is 2.15% lower following a sharp drop in China Property Developer Stocks.
- Despite a $1.4t program to tackle local government debt, the lack of new stimulus to boost consumption dampened investor sentiment. Ongoing weak economic data, including near-zero consumer price growth and falling factory-gate prices, added to concerns. UBS cut its 2025 growth forecast for China, citing uncertainty from Donald Trump’s U.S. election victory, which could lead to a more challenging trade environment.
- Speculative trading is surging, supporting turnover above 2t yuan in recent sessions. The upcoming Central Economic Work Conference next month may provide a new catalyst for further gains in Chinese stocks.
Foreign direct investment in China fell by nearly $13b in the first nine months of 2024, with companies like Nissan, Volkswagen, and IBM pulling back operations amid geopolitical tensions and economic concerns. Meanwhile, Chinese firms have sharply increased their outbound investment, adding $34b in overseas assets in the third quarter, as they expand their global presence to counter growing trade barriers.
EQUITIES: Asian Equities Edge Lower Following China Stimulus Update
Asian equities have started the week on the back foot driven by disappointment over China’s debt swap program, which investors found insufficient to address economic concerns. Persistent deflationary pressures in China and a drop in foreign direct investment further weighed on sentiment. Additionally, the US directive to halt advanced chip shipments to China hit stocks like Tencent and Taiwan Semiconductor. Weak commodity prices, particularly in crude oil, iron ore, and copper, dragged down Australian miners, exacerbating the region’s losses.
- Japan's major benchmarks are slightly lower today, with the TOPIX -0.30% with Real Estate the worst performing, followed by materials as commodity prices fall. The Nikkei 225 is performing slightly better although still trades 0.10% lower, consumer discretionary stocks are higher following a 6.40% jump from Sony following the company posting better-than-expected operating profit for second quarter. Operating income 455.08b yen, +73% y/y, estimate 335.31b yen. Suzuki is also 5.10% higher following a 43.9% rise in attributable profit to 217.45b yen for the first half of the fiscal year 2024.
- There has been decent selling by foreign investors of South Korean equities today, largely focus on the tech sector, with Samsung down 3.30%, while SK Hynix is 3.40% lower, the KOSPI is 1.10% lower. Taiwan equities are off earlier lows, although the TAIEX still trades down 0.60% for the session, with TSMC about 1% lower.
- Australian equities are lower, led by sharp declines in mining stocks following disappointment over China's underwhelming debt relief program. Major miners like BHP, Rio Tinto, and Fortescue dropped significantly due to concerns about weaker Chinese demand and falling commodity prices. Goldminer Resolute Mining plunged over 28% after its CEO and two executives were taken captive in Mali. The ASX 200 closed 0.35% lower. New Zealand's NZX 50 closed 0.66% lower.
EQUITIES: Asian Equities See Outflow Post US Election
Flows over the past week have been skewed to selling, with India marking 12 straight sessions of outflows. Indonesia, Thailand, Philippines & Malaysia have all seen an increase in selling as evidenced by the 5-day averages increasing.
- South Korea: Recorded inflows of +$153m Friday, bringing the 5-day total to +$129m. YTD flows remain positive at +$7.234b. The 5-day average is +$26m, better than the 20-day average of -$128m and the 100-day average of -$71m.
- Taiwan: Experienced outflows of -$77m Friday, totaling -$146m over the past 5 days. YTD flows are negative at -$11.705b. The 5-day average is -$29m, worse than the 20-day average of +$76m and the 100-day average of -$138m.
- India: Saw significant outflows of -$668m Thursday, with a total outflow of -$2.375b over the past 5 days. YTD flows are negative at -$1.769b. The 5-day average is -$475m, worse than the 20-day average of -$357m and the 100-day average of +$20m.
- Indonesia: Posted outflows of -$142m Friday, bringing the 5-day total to -$287m. YTD flows remain positive at +$2.236b. The 5-day average is -$57m, worse than the 20-day average of -$30m but better than the 100-day average of +$28m.
- Thailand: Recorded outflows of -$46m Friday, totaling -$106m over the past 5 days. YTD flows are negative at -$3.603b. The 5-day average is -$21m, slightly better than the 20-day average of -$29m and worse than the 100-day average of -$9m.
- Malaysia: Experienced outflows of -$25m Friday, contributing to a 5-day outflow of -$89m. YTD flows stand at +$288m. The 5-day average is -$18m, worse than the 20-day average of -$16m but better than the 100-day average of +$3m.
- Philippines: Saw outflows of -$32m Friday, with net outflows of -$133m over the past 5 days. YTD flows are negative at -$89m. The 5-day average is -$27m, worse than the 20-day average of -$8m and the 100-day average of +$4m.
Table 1: EM Asia Equity Flows
OIL: Crude Continues To Weaken, Key Industry Reports Out This Week
After falling sharply on Friday, oil prices are lower again today after China’s October PPI/CPI data printed lower than expected. The latest stimulus decision also disappointed markets, who have worried about the strength of China’s energy demand for some time. Brent is down 0.4% to $73.60/bbl after a low of around $73.50, while WTI is 0.5% lower to $70.06 after falling briefly below $70 several times. The USD index is 0.1% higher.
- China October CPI rose only 0.3% y/y down from 0.4% the previous month, while the PPI deteriorated to -2.9% y/y from -2.8%. Persistent weak price pressures added to oil market concerns regarding demand from China, the world’s largest crude importer.
- Monthly reports are released this week from OPEC on Tuesday, the US EIA on Wednesday and the IEA on Thursday. Demand forecasts will be in the spotlight. IEA has been less optimistic than OPEC about the 2025 outlook projecting a market surplus for some time.
- The Brent prompt spread, difference between two nearest contracts, remains bullish but is narrowing signalling that physical strength is moderating, according to Bloomberg.
- There are no data in the US or Europe with Veterans/Remembrance Day observed in a number of countries. ECB’s McCaul speaks later.
GOLD: Trump Win Weighs Despite US Fed Cut
Gold is 0.6% lower in today’s Asia-Pac session, after closing 0.8% lower at $2684.77 on Friday.
- Friday’s move left bullion 1.8% lower on the week.
- On Friday, Wall Street ended on a positive note, with the S&P marking its fourth consecutive gain amid optimism for a pro-growth, business-friendly agenda under Trump. The index rose 0.38% to close at 5,995, testing but not quite reaching the 6,000 level. This marked the S&P's 50th record high this year. The week's 4.66% rally was also the strongest weekly gain of the year.
- US short-term rates softened amid the rally in risk assets and reduced expectations for rate cuts. Typically, lower rates are supportive for gold, as it carries no interest yield.
- Despite this week’s dip, UBS analysts say that gold will likely see support as a hedge against the inflationary pressures of higher US government borrowing.
- From a technical perspective, the trend condition remains bullish, and the latest pullback is considered corrective, according to MNI’s technicals team. Attention is on a key support at $2,647.4, the 50-day EMA. For bulls, a reversal higher would refocus attention on the bull trigger at $2,790.1, the Oct 31 high.
- Meanwhile, silver has underperformed, falling by ~2.5% on Friday and 3.8% on the week.
China Provides Lifeline to Local Governments with Debt Swap Line
- China announced a CNY10 trillion debt swap program to assist local governments' debt burden over a 3- and 5-year schedule.
- Market estimates had ranged from CNY6trn to CNY10tn.
- The Central Government will raise the local government debt ceil to CNY35tn.
- An initial CNY6trn is available over three years and a further CNY4tn over five years.
- The plan is aimed at helping alleviate the fiscal constraints on local governments by allowing them to refinance expensive (off balance sheet) debt at lower interest rates.
- The debt and accompanying interest payments have seen local governments forced into austerity measures through the cutting of services and salaries and pensions.
- The swap is “a major policy decision taking into consideration international and domestic development environments, the need to ensure the stable economic and fiscal operation, and the actual development situation of local governments,” Finance Minister Lan Fo’an said at a briefing (as per BBG).
- Lan estimates the swap can save around CNY600bn in interest payments over five years, which will allow resources to boost investment and consumption. He said outstanding hidden debt was 14.3 trillion yuan as of the end of 2023 (as per BBG).
- The facility had been well flagged leading up to this announcement over the last month.
- President Xi has described local government debt as one of the major financial risks for China’s prosperity.
- Local governments have traditionally relied on land sales to support the income of the region have seen that part of their fiscal position decimated given the decline in the property market.
- Equally the growth in infrastructure projects has reached an inflection point where some regions are struggling to find suitable projects.
- Despite what equates to an increase in in issuance going forward, the yield on the ‘on-the-run’ China 10 year declined post the news.
INDONESIA: Prabowo Pivots to China.
- Indonesian and Chinese firms will sign agreements worth more than US$10bn according to President Prabowo (source: BBG).
- Prabowo’s first foreign trip as President is to Beijing, where he met with President Xi.
- Prabowo described the relationship between China and Indonesia as ‘getting stronger and stronger’ and that ‘Indonesia considers China not only as a great power, but as a great civilization.’
- China and Indonesia have agreed to the joint development of fisheries, oil and gas in areas of overlapping claims.
- China is a source of $7bn of investment in Indonesia’s commodity processing and infrastructure projects and the new President describes the relationship as a priority.
INDONESIA: Consumer Confidence Gradually Trending Lower
Indonesian consumer confidence fell 2.4 points in October to 121.1, the lowest since December 2022. It has been gradually trending lower since April. Private consumption growth has been solid this year running at 4.9% y/y, slightly stronger than 2023. October is just one data point but maybe it is signalling the start of a slowdown in Q4. Bank Indonesia (BI) cut rates once this year in September but the outlook for further easing will depend on rupiah stability (USDIDR up 0.7% since October meeting).
- Retail sales were still robust in the year to August rising 5.8% y/y up from 4.5% in July, but domestic car sales are weak contracting by 10.4% y/y 3-month average in September.
- BI has said that it can support the economy through optimising macroprudential policies rather than rate cuts if it decides that it needs it, but it believes that private consumption will one of the drivers of Q4 2024 growth.
- The government of new President Prabowo is planning an increase in fiscal spending, which may also support private consumption going forward.
Indonesia private consumption y/y% vs consumer confidence
Philippines Cuts Corporate Income Tax.
- Philippines signed into law a reduction in the corporate income tax rate from 25% to 20%.
- The reduction is aimed at attracting more investments in the country and is coupled with various changes to their tax incentive programs.
- In his public address to announce the changes President Marcos noted “We have taken a decisive step towards our vision of a globally competitive and investment-led Philippine economy.”
- GDP growth in the Philippines has moderated this year to +5.2%YoY from +6.4% YoY prompting the Central Bank (Bangko Sentral ng Pilipinas) to cut rates twice this year with indications there could be more to follow.
- Tomorrow see’s the release of October’s CPI in India.
- Market surveys suggest that a meaningful pick up in inflation is possible with expectations for the month of a rise of +5.90% (following 5.49% in September).
- The last month’s rain in the southern states has had a material impact on crops, causing damage and delaying harvest driving prices higher.
- Onion prices have hit a 5-year high causing debate across the economy and even in congress.
- Edible oil prices have surged also, due to Diwali.
- The RBI has an upper boundary for CPI of 6% and if market surveys are correct, October’s CPI will challenge that.
- Recently RBI Governor Das has been particularly hawkish in his views, sticking to his bullish GDP growth forecasts whilst warning of October’s inflation spike.
- RBI Is one of the few of it’s Asean peers that is not currently in the process of cutting rates, or seemingly contemplating.
- Market rates currently factor in no movement in rates at the Central Bank’s last meeting of the year on December 6, with the next meeting not until February 2025.
ASIA FX: Most USD/Asia Up, IDR, INR & PHP Modest Outperformers Since US Election
Most USD/Asia pairs are higher in the first part of Monday dealing. This is more so in South East Asia than North East Asia though. USD/CNH has exhibited some degree of volatility, bit last tracked near 7.2000, little changed for the session. Equities were weaker as markets digest the NPC announcement from Friday, but dips have been supported. The USD/CNY fixing bias was modestly negative.
- It has been a similar backdrop for spot USD/KRW, which was last near 1395/96. Earlier data showed a slump in exports for the first 10-days of Nov, but day count issues impacted. Household loans continued to rise in Oct, a BOK watchpoint. Local equities are weaker, off by around 1.00%.
- In SEA, USD/THB has gaped higher by 0.80%, last near 34.30. Spot markets are playing catch up with USD strength post Friday onshore closes. USD/MYR is up towards 4.4100 around 0.60% weaker in ringgit terms.
- USD/PHP is firmer, like other parts of South East Asia FX, in line with catch up to recent USD gains and weaker yen trends so far today. The pair was last near 58.60, off 0.60% in PHP terms.
- In the past week, so capturing most of the post US election period, the PHP is the third best EM Asia FX performer, off 0.50% (with INR down 0.33%, and IDR up 0.36%). The weakest performers are THB, MYR, CNH and KRW over this period.
- The 3 relative outperformers generally have less exposure to trade, in terms of being more domestically orientated, relative to underperformers over the past week. This likely reflects concerns around a return of the Trump administration and potentially fresh protectionist policies in 2025.
- Spot USD/IDR is up but as per above still outperforming. We were last near 15675/80, so little changed in IDR terms.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 11/11/2024 | 0700/0800 | *** |  NO | CPI Norway |
| 11/11/2024 | - | *** |  CN | Money Supply |
| 11/11/2024 | - | *** |  CN | New Loans |
| 11/11/2024 | - | *** |  CN | Social Financing |
| 11/11/2024 | - |  GB | DMO quarterly investors/GEMM consultation | |
| 12/11/2024 | 0700/0800 | *** |  DE | HICP (f) |
| 12/11/2024 | 0700/0700 | *** |  GB | Labour Market Survey |
| 12/11/2024 | 0900/0900 |  GB | BOE's Pill panellist at UBS conference on Reversing tightening | |
| 12/11/2024 | 1000/1100 | *** |  DE | ZEW Current Conditions Index |
| 12/11/2024 | 1000/1100 | *** |  DE | ZEW Current Expectations Index |
| 12/11/2024 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 12/11/2024 | 1100/0600 | ** |  US | NFIB Small Business Optimism Index |
| 12/11/2024 | 1200/1200 |  GB | Asset Purchase Facility Quarterly Report | |
| 12/11/2024 | 1330/0830 | * |  CA | Building Permits |