Halister News

(Bloomberg) -- Mongolian govt bonds jump after Fitch downgrades sovereign rating to B- with stable outlook.

• Yield on govt bond due December 2022 slides 14bps to 8.86%, while bond due April 2021 drops 13bps to 10.051%; January 2018 note falls 5bps to 10.319%
• Moody’s cut rating earlier this week
  • Read more: Fitch downgrades Mongolia

(Bloomberg) -- Dec. 2016 bund futures contract taking out the 161.10-17 resistance area which opens up 161.64 Fibonacci retracement of high-low move seen post-Trump win, Bloomberg technical analyst Sejul Gokal writes.

• See chart; now +46 ticks to 161.24
• Next resitance seen at 161.62-64 -- channel top, 61.8% Fibonacci of 163.19-159.14 move post-U.S. election outcome
  • 200-DMA at 162.00
  • Intraday supports at 160.69 and 160.50
• Daily MACD crossing bullishly today; 9-day RSI at 50, with room to move much higher before turning overbought
• Note: Nov. 17, Bund Futures Corrective Bounce Eyes 161.64

• NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- Asian credit tighter overnight and EUR equity futures currently trading higher suggest a firmer bias to EUR credit spreads Tuesday, Bloomberg strategist Simon Ballard writes.

• Commodities rallying, led by metals, on renewed optimism for global macro outlook, driving pick-up in risk on sentiment
  • Buoying inflation expectations; Fed fund futures pricing in 100% probability of Dec. Fed rate increase
• But global economic and political uncertainty remains elevated; may damp absolute near-term risk appetite potential

• Bloomberg Barclays Eur-Agg Corporate index closed Monday at 124bps (flat); Bloomberg Barclays Eur HY index closed at 425bps (+4bps)
• CDX IG closed Monday -0.7bps at 75.62; iTraxx Asia Ex Japan IG is currently -1.8bps at 127.64 and iTraxx Australia quoted -2.3bps at 110.83

NEWS

• Corporate News
• Kingfisher 3Q B&Q U.K. LFL Sales Beat; Castorama, Brico Miss
• Homeserve 1H Pretax Gains, Confident of Meeting FY Forecasts
• Lufthansa Pilots to Strike Wednesday in Walkout Over Pay
• Uniper 9m Sales Fall 26%, Adjusted Ebitda Rises 54%
• Compass Underlying Oper Profit Beats, 2017 Expectations Positive
• Mitchells & Butlers FY Adj. Ebitda Misses, 8-Wk LFL Sales +0.5%

• Financial News
• CYBG FY16 Underlying Pretax +39% to GBP221m; CET1 Ratio 12.6%
• Credit Suisse Said to Face Tax Probe Over Undeclared Accounts
• De La Rue Says 1H In Line With Expectations; Outlook Unchanged
• Julius Baer Said to Hire Singapore Private Bankers From BSI
• Hong Leong Bank 1Q Net Income 542.6m Rgt vs 503m Rgt Y/y

• Rating News
• China Affirmed at ‘A+’ by Fitch; Outlook Stable
• S&PGR reiterates Australian credit rating warning
• Fitch: Swire Pacific Rating Intact Despite Higher 2017 Leverage

• Other News
• Fed Hike Is Certainty for Bond Traders as Market Odds Reach 100%
• Dollar’s Tremor at 6-Month Yen High Has Hedge Fund Calling a Top
• Too-Big-to-Fail Banking Finds Regulatory Loophole in Scandinavia

ANALYST VIEWS

• We do not expect a sharp widening of DM yields spreads (in 2017) in response to relative changes in fiscal policy but, with investment returns low, a moderate price divergence in DM fixed income could matter a great deal to portfolio performance: Roubini
• Outflows amid fear of higher US (and Eurozone) rates are injecting much apprehension into the investor base. It’s not yet a torrent, and the (exit) door is wide enough to accommodate the flow, but it can look awfully narrow pretty sharpish if panic sets in: creditmarketdaily.com

NEW ISSUES

• Monday was the fourth zero volume session this month
• European IG credit pipeline here and HY credit pipeline here

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- India’s bond rally on the back of large deposits coming into its banking system may have mostly run its course for now as markets have priced in a 25bps rate cut by RBI at Dec. 7 meeting, according to traders.

• Benchmark 10-year yield has fallen 47bps to 6.33% since PM Modi’s surprise announcement on Nov. 8 that scrapped high- value currency notes; plunge in domestic yields has bucked uptrend in global yields spurred by expectations of fiscal expansionary policies from U.S. President-elect Trump
• Spread between 10-year govt bond yields in India and the U.S. has narrowed to 400bps, lowest since May 2010
• Indian banks got 5.12t rupees ($75b) in deposits after nation’s demonetization, RBI says in statement; global funds, meanwhile, have sold net 120.4b rupees of local bonds since U.S. presidential election outcome on Nov. 9

• DBS (Ashish Vaidya, Mumbai-based head of trading)
  • Focus is on how much cash ultimately remains in banking system; estimates about 4t-5t rupees would be positive for local government securities
  • Markets are pricing in a 25bps rate cut by RBI in December, with a dovish policy stance
  • In short-term, local bond yields may have mostly bottomed out; sees Fed’s likely rate hike next month and FOMC statement as key in determining future movements in domestic yields

• FirstRand (Harihar Krishnamoorthy, Mumbai-based treasurer)
  • Total amount of deposits that stay in banking system will be a key focus once full withdrawals are allowed; 1.5t rupees of deposits are scheduled to flow out in November due to non-resident deposit maturities
  • Markets are pricing in a 25bps rate cut by RBI in December, which is justified by inflation readings
  • Higher cost of funding for foreigners and weaker rupee suggest that overseas investors’ buying of local govt debt could be limited
  • India’s 10-year yield is likely to bottom out at 6.25% for now

• IndusInd Bank (Shyamal Karmakar, head of rates & credit trading)
  • Abundant liquidity and expectations of “radical” easing by RBI are driving demand for local govt debt; says bond market is ignoring external factors such as USD strength and sharp rise in global yields
  • Demonetization may be a game changer but early signs of actual impact would likely be visible only by January/February; if any “radical” rate cut was to happen, February meeting could be good time as budget would have been presented by then
  • Local bonds will probably maintain their uptrend, despite negative factors such as sporadic bouts of foreign selling

• SBI DFHI (Ram Kamal Samanta, vice president for treasury)
  • Yield curve is expected to bull-steepen as banking system awash with cash means fewer OMOs
  • Markets have factored in a 25bps cut by RBI in December
  • Need to monitor impact on India’s fiscal situation from PM Modi’s surprise announcement on Nov. 8

(Bloomberg) -- “Don’t believe the news. Certainly, our records will bear us out that we have been cooperating with law enforcement authorities,” Vencent Salido, deputy director at Anti-Money Laundering Council, says at forum in Manila.

• NOTE: President Rodrigo Duterte on Nov. 14 rebuked central bank and Anti-Money Laundering Council for “being hard to deal with” and warns them against confrontation if they don’t cooperate Link
• Coordination has led to proper investigation
• Alleged drug traders in national prison don’t have bank accounts under their names, instead use associates, friends and shell companies
• Banks should be allowed to hold on to an account for 2 days, while agency should be given power to freeze accounts for 30 days without having to seek court permission, Salido says when asked on possible amendment to Anti-Money Laundering Act following $81m in stolen Bangladesh fund which found its way to Philippine bank, casinos early 2016 Link

(Bloomberg) -- USD/JPY fell briefly to session low after a magnitude 7.4 earthquake struck Japan off the coast of Fukushima, before quickly reversing decline to stay below 111. WTI crude futures advance to a four-week high on optimism an OPEC deal is coming.

• WTI up 2.6% to $48.73/bbl; Treasury 10-year yield steady at 2.31%
• USD/JPY -0.11% to 110.70 vs 110.27-110.90 range; Nikkei 225 gains 0.2%
  • Leveraged selling immediately after earthquake was absorbed by real money funds and Tokyo corporates, say traders
  • USD/JPY trims drop as impact from quake was limited and buy-on-dip interest may emerge around 110.00, says BTMU
  • Japan lifts all tsunami alerts from quake at 12:50pm JST: JMA
  • Kuroda says BOJ’s new policy can control long-term interest rates, although not as well as it can control short-term rates; adds that it’s inappropriate to discuss exit strategy at the moment
• AUD/USD +0.37% to 0.7396 vs 0.7364-0.7400 range
  • AUD/NZD gains as macro funds-related selling of FX pair stalls on report of earthquake on New Zealand’s North Island, says trader
• NZD/USD +0.20% to 0.7080 vs 0.7063-0.7086 range
  • Westpac no longer expects RBNZ rate cuts in 2018, 2019
  • N.Z. net immigration rises to a record, 70,282 in year ended Oct. 31
• Click here to monitor statistically significant cross-asset market moves on developed markets