HALISTER1: Aussie Bonds Follow Global Yields Higher on Oil, Eco Data: NAB

Aussie Bonds Follow Global Yields Higher on Oil, Eco Data: NAB

(Bloomberg) -- Aussie bond market is following global bond yields higher, according to note today from NAB.
  • Factors supporting higher yields include:
    • Anticipation of a freeze or cut in oil production
    • A Clinton victory is looking more likely, and so market has firmed up Fed rate-hike expectations
    • Global economic data are surprising on the higher side of expectations
    • There’s uncertainty around foreign demand for U.S. Treasuries given hedging costs
  • Australia-U.S. 10-year yield differential has widened in the past two weeks in part because market has been making room for the new 30-year bond issuance
  • NOTE: Pricing for 2047 bonds expected today in Australia’s first ever sale of 30-year notes
  • Yield on 3-year bond rises to 1.748% today, highest since May 3, while 10-year yield touches 2.281%, a level unseen since June 24
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: INSIDE MALAYSIA: Ringgit Slides Ahead of Factory Orders

INSIDE MALAYSIA: Ringgit Slides Ahead of Factory Orders

(Bloomberg) -- Ringgit falling for fifth day in past six amid broad dollar strength ahead of Sept. FOMC meeting minutes.
  • Ringgit falls 0.4% to 4.1905 per dollar, weakest since March
  • USD/MYR above 200-DMA; slow stochastics %K at 92, in overextended territory
    • Resistance: 4.2350, Feb. 29 high; 4.2467, Feb. 24 high; 4.2808, Jan. 26 low
    • Support: 4.0913, 200-DMA; 4.0760, 50-DMA; 4.0677, 100- DMA
  • August industrial production probably rose 5.4% y/y vs 4.1% in July, according to median estimate in Bloomberg survey; data due at noon
  • USD/MYR to edge down toward 3.90 by year-end, as recovering oil prices should see trade surplus widening, CBA Asian currency strategist Andy Ji wrote in note yday
    • AUD/MYR to edge lower toward 2.85 by year end, as narrower Australia-Malaysia real policy rate differentials should see a lower cross
    • BNM could have more scope to ease policy given outlook for CPI remains soft; deteriorating macroeconomic backdrop and festering 1MDB fiasco should continue to weigh on MYR
  • Yield of 3.9% govt bond due Nov 2026 rose 3 bps yday to 3.609%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Andy Ji (Commonwealth Bank of Australia)

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HALISTER1: USD/KRW May Test 100-DMA After BOK on Bullish Signs: Analysis

USD/KRW May Test 100-DMA After BOK on Bullish Signs: Analysis

(Bloomberg) -- USD/KRW may rally toward 100-DMA resistance after forming a potential bullish triple bottom in the past two months, Bloomberg strategist David Finnerty writes.
  • FX pair has bounced off support at 50-DMA; MACD has risen above signal line and is bullishly looking to rise above zero while slow stochastics are bullish with %D reading of 65 and gaining
  • While Bank of Korea will probably leave rates unchanged for its Oct. 13 decision, USD/KRW is being supported by rising expectations of a Fed rate hike in Dec.
    • Fed President Evans said Oct. 11 that policy “may well be changing soon,” repeating an observation he made last week
  • BOK is expected to leave its 7-day repo rate unchanged at 1.25%, according to 17 of 18 economists in Bloomberg survey. One economist expects a 25 bps cut
    • Rising household debt along with uptick in Sept. CPI may result in central bank adopting a wait-and-see approach despite declining y/y exports last month
    • BOK Gov. Lee told parliament on Oct. 4 that the effects of a rate cut on consumption and investment have decreased due to factors including a global slowdown. Also said a rate cut can be a valid move if recession concerns arise during the nation’s corporate restructuring
  • NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1206Z KS (Bank of Korea/The)

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HALISTER1: Thailand 5-Year CDS Premiums Rise Most in a Month

Thailand 5-Year CDS Premiums Rise Most in a Month

(Bloomberg) -- 5-year credit-protection costs for Thailand rose 7 bps yesterday to 90 bps, highest since Aug. 9, according to CMA New York data.
  • Increase was biggest since Sept. 9
  • USD/THB rising for eighth day, up 0.2% to 35.440
  • 5-year credit-protection costs for China up 3 bps to 107 bps, highest since Sept. 27
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: Life Insurance Investors Beware of Credit Spreads: Credit Suisse

Life Insurance Investors Beware of Credit Spreads: Credit Suisse

(Bloomberg) -- The outperformance of U.S. life insurance stocks post-Brexit makes sense given S&P 500 recovery and the rising 10-Year Treasury yield, but investors aren’t considering the impact of tightening credit spreads, Credit Suisse’s John Nadel writes in note.
  • Investors should be cautious as stock outperformance is “at odds with actual new money yields"; 10-year yield is up ~30 bps since Brexit low, but yield on Credit Suisse 7-10 Year Liquid U.S. Corporate Index is down 1bp as credit spreads have tightened, risk appetite has recovered
  • Risk-free rates aren’t nearly as important as yields on L-T investment grade corporate and other fixed-income securities because credit-related fixed income assets make up much larger portion of total invested assets
  • NOTE: SPX has gained 6.8% since June 27 post-Brexit low, while BI North America Life Insurance Index (BILIFENP) is up gained 23%
  • NOTE: Oct. 7, Life Insurers Initiated With ‘Cautious’ View at Credit Suisse
  • NOTE: Oct. 5, AIG Led U.S. Life and Multi-Line Insurers Bond Performance in 3Q: Bloomberg Intelligence
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
LNC US (Lincoln National Corp)
MET US (MetLife Inc)
PFG US (Principal Financial Group Inc)
PRU US (Prudential Financial Inc)
VOYA US (Voya Financial Inc)

People
John Nadel (Credit Suisse Holdings USA Inc)

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HALISTER1: Plenary Health Peel LP - DBRS Rating Report

Plenary Health Peel LP - DBRS Rating Report

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
1002292D CN (Plenary Health Peel LP)

People
Grant Headrick (DBRS Ltd)

Topics
Fixed Income Research
Credit Analysis Research
Credit Research
Investment Research
Issuer Focused Research

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