Halister News

(Bloomberg) -- Here’s a roundup of Indian co. debt-rating changes.

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DOWNGRADES

• Chola Textiles
  • Long-term loan facilities cut to BBB+ from A- at Crisil
  • LT loan facilities of Gomathi Spinning and Pallava Spinning also cut to BBB+ from A- at Crisil
  • Cites change in holding structure, management control of group cos.

UPGRADES

• Sunshine Infra Engineers
  • LT loan facilities raised to BBB- from BB+ at Crisil
  • Cites substantial, sustained increase in scale of operations

• V.S. Timbers
  • LT loan facilities raised to BB from BB- at Crisil
  • Cites sustained revenue growth, stable profitability

(Bloomberg) -- Asian currencies strengthen at month-end, led by Aussie dollar on better-than-expected economic data; majority of region’s FX still in line for declines in May.

• Currencies pushed higher on month-end repatriation by export cos., Mizuho Bank emerging-market trader Masakatsu Fukaya says
  • Market participants waiting for reaction to Yellen’s Friday remarks on Fed rates when Europe and U.S. return after holidays yday
• Bank Indonesia’s exec director of monetary policy says rupiah slightly deviating from fundamentals
  • Currency is headed for 3.1% drop vs dollar in May, first monthly decline since Nov.
• Asian stocks trim worst monthly drop since Jan. rout
• In Australia, April building approvals +3.0% m/m, most since Dec.; est. -3.0%; +0.7% y/y vs est. -6.7%
  • 1Q net exports add 1.1 point to GDP vs est. 0.7 point
  • Total April lending +6.7% y/y vs est. +6.5%
  • AUD/USD climbs 0.7%, though topside heavy with fund- related offers, Asia-based FX trader says; pair falls 4.8% in May
• Yen halts two-day drop against dollar; is down 4.1% in May after gaining for three straight months
  • April data on industrial production, employment and household spending paint mixed-to-negative picture of Japanese economy
  • PM Abe, Finance Minister Taro Aso agree to delay sales- tax increase to 2019 without dissolving Lower House: NHK
  • BOJ Governor Kuroda says goal of primary balance in fiscal 2020 is an “important point” in debate over sales tax delay: Hokkaido Shimbun
• Kiwi snaps two-day drop against dollar; down 3.6% in May
  • New Zealand April building permits +6.6% m/m vs revised -9.7% in March; ANZ May business confidence at 11.3, highest since Dec.
• China weakens fixing for second day, by 0.01%; set at lowest level since Feb. 2011; onshore and offshore yuan little changed vs dollar
  • Onshore yuan down 1.6% in May, most since Aug.; offshore yuan also down 1.6%, most since Dec.
  • PMI may strike another blow to yuan before Fed: analysis; China manufacturing PMI due 9am local time Wednesday
  • Yuan fixing more sensitive to dollar strength than weakness: HSBC
  • Chinese sovereign bonds head for worst month in a year
  • New bond rules raise index inclusion prospects: BofAML
  • PBOC Deputy Governor Chen says nation should promote equity financing and lower leverage ratio, Xinhua reported yday
• South Korea April industrial production -2.8% y/y, biggest decline since last July; est. -1.3%
  • Bank of Korea to release minutes from May meeting, when dovish new members joined
  • Won rises, though headed for 4.3% decline in May
• Malaysia’s ringgit down 5.1% for the month, Singapore dollar down 2.5%, Thai baht down 2.3%; Taiwan dollar down 1.0%, Indian rupee down 1.3%; Philippine peso up 0.3%

(Bloomberg) -- USD/THB may rally to test resistance at 36.423, Jan. 8 high, in medium term, ignoring any better-than-expected CPI data, as markets continue to price in growing probability of a Fed rate hike this year, Bloomberg strategist David Finnerty writes.

• May CPI is forecast to rise to 0.27% from 0.07% in April, according to median est. of economists in Bloomberg survey; data due tomorrow at 1:30 pm local time
• USD/THB MACD remains bullish with reading above zero and signal line
• Thai central bank has managed currency volatility to ensure baht moves in line with regional peers and doesn’t obstruct economic recovery, Governor Santiprabhob says yesterday
  • This suggests BOT accepts a lower baht versus dollar
  • USD/THB is set for first monthly gain since Dec
• Better-than-forecast U.S. payroll and wage data due June 3 should increase probability of Fed hike in coming months; Fed may hold off raising in June given Brexit event risk is upcoming
• 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.

(Bloomberg) -- Rupiah rises along with other Asian currencies, though still headed for first monthly decline since Nov.; govt plans to announce 13th economic policy package this week, Investor Daily Indonesia reports.

• Coal output seen falling this year on costs, competition
• Seems to be room for Bank Indonesia to loosen policy given current inflation, DBS economists write in note received May 30
  • Doesn’t necessarily mean rate cut; recent comments from BI officials suggest they may ease loan restrictions to boost loan growth, which remains sub-10%
• International funds were net buyers of 2.8t rupiah ($205m) in Indonesian bonds on May 27, according to finance ministry data; net buyers of $42.3m in local equities yesterday, according to exchange data
• Rupiah up 0.1% to 13,633 per dollar; down 3.3% this month
• Yield on 8.375% govt bond due Sept. 2026 rose yday for first time in four days, up 2 bps to 7.876%, according to IDMA data

(Bloomberg) -- Deutsche Bank emerged as a focus of the US Treasury market probe, New York Post reports, citing unidentified people familiar.

• Probe is on whether traders rigged auctions for govt debt
• Deutsche Bank hasn’t disclosed it is under investigation for Treasury trading
• An unidentified Deutsche Bank spokeswoman declined to comment to NYP
• NOTE: Treasuries Probe Narrowing, Still Includes Goldman, NYPost Says

(Bloomberg) -- Singapore dollar has weakened 2.6% this month vs U.S. dollar; Singapore M2 money supply due today at 10am local time; click here for a chart of the trend.

• Singapore headline inflation may only turn positive toward the end of the year, Goldman Sachs economists write in note received May 30
  • See a marginal increase in full-year average to -0.4% in 2016 from -0.5% in 2015; policy makers continue to expect core inflation to pick up gradually in 2016 as the disinflationary effects of oil as well as budgetary and other one-off measures ease
• USD/SGD now down 0.2% to 1.3795, below 100-DMA at 1.3818
• AUD/SGD showing bullish momentum divergence between falling cross rate and rising slow stochastics; cross now steady at 0.9925, down 2.9% this month
• Singapore PM visits Finance Minister Heng in hospital, says he’s recovering well
• Singapore reappoints 4 directors to central bank board
• 10-year govt bond yield rose yesterday by 7 bps to 2.2428%, highest daily close since March 2

(Bloomberg) -- If Chinese manufacturing PMI disappoints with reading below 50 this week, investors may be encouraged to sell the yuan regardless of what Fed plans for U.S. rates, analysts say.

• Low PMI could accelerate outflows as sentiment for Chinese economy deteriorates; yuan already heading for biggest monthly decline since Aug.; down 1.6% vs dollar in May
  • USD/CNY rose 0.25% to 6.5815 Monday, approaching 2016 high of 6.5956; USD/CNH gained 0.22% to 6.5904, highest since Feb. 3; PBOC set yuan fixing at weakest level since 2011
• Growing expectation for Fed rate hike in coming months heightens concerns for capital flight; Yellen said Friday an increase in U.S. rates would be appropriate, though didn’t detail timing
  • Fed funds futures put chances at 30.0% for June, 53.8% for July
• Median est. in Bloomberg survey is for China May PMI at 50.0 vs 50.1 in April; PMI also expanded in March, but contracted every month from Aug. through Feb.
  • Ests. range from 49.7 to 50.2
  • 32% forecast number below 50

• Natixis (Iris Pang, senior Greater China economist)
  • Minor drop in factory PMI may bring more volatility to yuan, adding to concerns on Chinese debt and possible Fed rate hike

• Huabao Trust (Nie Wen, economist)
  • Some indicators such as electricity usage have been falling in May, suggesting slowdown in factory activity
  • If May PMI data below 50, could accelerate capital flight as outlook deteriorates

• Of all key Chinese monthly economic data, manufacturing PMI has higher correlation with yuan than any other since 2014
  • Manufacturing PMI & USD/CNY at -0.689
  • Exports y/y in USD term & USD/CNY at -0.335
  • M2 growth & USD/CNY at 0.320
  • Industrial production & USD/CNY at -0.445
  • CPI y/y & USD/CNY at 0.103; with PPI at -0.613

• OCBC Bank (Tommy Xie, economist)
  • PMI has replaced industrial output as main reflection of corporate sentiment on economic outlook
  • If companies turn more pessimistic, won’t be willing to convert dollar holdings into yuan; will look to increase FX holdings
  • Yuan’s longer-term direction more decided by fundamentals, such as health of China’s economy, than fluctuation of dollar