Halister News

(Bloomberg) -- Most Asian currencies gain, led by KRW and JPY, as June Fed rate rise expectations ease slightly from last week’s high. Chinese yuan climbs as PBOC sets stronger reference rate for a second day.

• Fed funds futures pricing 28% probability of June hike on May 20 compared to a high of 32% after FOMC April minutes
• Dollar’s pull back against most Asian FX today is due to uncertainty in BOJ FX policy, which is driving yen higher, while some traders are taking profit on long dollar positions after hawkish Fed statement last week, Moh Siong Sim, FX strategist at Bank of Singapore says in interview
  • Looking ahead, likelihood that Fed raises rate in June could be more than 50%; so uptrend in dollar against EM and commodity currencies remain intact
• Japanese yen gains after April trade surplus widened
  • Exports in April -10.1% y/y vs est. -9.9%; imports -23.3%, leaving a trade surplus of 823.5b yen vs est. 540.0b yen
  • Governor Kuroda tells CNBC in interview that BOJ’s monetary policy is targeting the inflation rate, not the exchange rate
  • Leveraged funds increased net long yen position by 2,380 contracts to 30,164 in week ended May 17: CFTC data
• Korean won rises for second day
  • BOK’s biannual risk survey shows China’s slower economic growth, rising possibility of default by Korean companies and household debt are among major risks for the financial system
  • Morgan Stanley expects won to fall to 1,250 per dollar this year, with capital outflows likely to accelerate due to weak growth and low yields; monetary policy easing more than priced in by market
  • Govt to cut 2016 growth forecast to below 3%: Dong-A Ilbo newspaper
• Chinese yuan rebounds after 3 weeks of losses as PBOC sets a stronger yuan reference rate for second day
  • China mkts “cautious and confused” after recent high level comments shifted investors’ policy expectation to “neutral with a tightening bias”, UBS says
  • May Minxin manufacturing PMI falls to 45.8, declining 1.1 percentage points from previous month
  • Time to short yuan against subset of CFETS basket: Deutsche Bank
  • Yuan could drop to 6.8 per dollar if Dollar Index returns to 100, Macquarie Bank says
• Recommend switching out of THB 10Y into MYR 10Y as forward real yield projections much more attractive for MYR bonds, ANZ writes in note dated May 20
  • Expects significant favorable swing in real yields towards Malaysia over the next six to nine months
  • Malaysia’s inflation is expected to ease from 1Q due to the high base of GST implementation in April last year
  • Forecasts the CPI to drop from 3.4% in 1Q to 2.1% by 1Q 2016
• Aussie, Kiwi gain
  • RBNZ needn’t be in a rush to return inflation to its 2% inflation target, according to former governor Don Brash
  • Bank of New Zealand expects RBNZ to hold cash rate in June
  • AUD/USD ascent brings macro selling above 0.7240 into play, according to an Asia-based FX trader.
  • Coalition narrowly leads Labor in Fairfax-Ipsos poll ahead of Australia’s July 2 election, Sydney Morning Herald says
  • Leveraged funds cut net AUD longs for third consecutive week, paring positions by 11,927 contracts in week ended May 17 to 25,841, the least since Mar. 29: CFTC data

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

• To get this story sent to your inbox real-time, run NI INRATINGS , click on Display & Edit, then Set Alert Delivery

DOWNGRADES

• Global Offshore Services
  • Term loan cut to BBB+ from A at Care
  • Cites deterioration in cash generation ability

• Raghuvar India
  • Long-term loan facilities cut to B+ from BB- at Crisil
  • Expects co.’s business risk profile to face pressure over the medium term in the edible oil industry

UPGRADES

• Commercial Syn Bags
  • LT loan facilities raised to BBB from BBB- at Crisil
  • Cites healthy revenue growth, stable profitability

• Rayalseema Wind Energy
  • LT bank facilities raised to A(SO) from A-(SO) at Care
  • Cites credit enhancement via corp. guarantee by Greenko Energies

• Shakti International
  • LT loan facilities raised to BBB+ from BBB at Crisil
  • Cites improvement in group’s business risk profile due to diversification into new commodities

(Bloomberg) -- Vietnamese carrier to sign deal with the U.S. planemaker in the presence of President Barack Obama, who is currently visiting the Southeast Asian country, people with direct knowledge of the matter say, asking not to be identified as the matter still isn’t public.

• The low-cost carrier, which started Dec. 2011, is seeking to expand in a market that’s grown 20% annually in the last three years
• VietJet operates more than 250 flights a day with 50 routes in Vietnam and across the region

--KENNETH WONG

(Bloomberg) -- Any deal to buy Monsanto expected to value co. at premium to market value, FT reports, citing unidentified people familiar.

• NOTE: Bayer Seen Paying Upward of $63 Billion to Acquire Monsanto

(Bloomberg) -- Rupiah holds steady, halting a 3-day decline in line with firmer Asian currencies, as dollar index falls first time in 4 days.

• EM Asian currencies and commodity currencies are still susceptible to resurfacing concerns over Fed’s tightening and potential external uncertainty in June including U.K.’s Brexit referendum, Scotiabank says in note today
  • Unwinding of carry-trade may weaken high-yielding regional currencies such as INR and IDR
• Stay long IDR bonds with FX hedge, ANZ says in May 20 note
  • Hold on to long 15-year bond with entry at 7.86%, target 7.40% and stop-loss 8.10%
  • Several local positives for Indonesia which should benefit the IDR duration story, even as IDR is vulnerable to broad USD strength
• Rupiah little changed at 13,605 per dollar
• Yield on 8.375% govt bond due Sept. 2026 increased 6 bps to 7.927% on May 20, according to IDMA data
• Global funds bought net 825b rupiah ($60.7m) of local govt bonds on May 18, second day of inflows: finance ministry data
  • They bought net $8.5m in local stocks May 20: exchange data

(Bloomberg) -- USD/JPY decline is a corrective move tracking lower Nikkei 225 index, says Takuya Iwasaki, executive general manager of foreign-exchange sales at Bank of America.

• Last week’s close at 110.15 confirms view by some market participants that mid-110.00 area has heavy technical resistance , says Tokyo-based Iwasaki by phone
• USD/JPY may find support in 109.50-70 range as resistance zone from early last week turns into support area, given Fed officials may continue showing a hawkish stance
• No fiscal coordination from G-7 finance ministers and central bank governors meeting last week, unchanging govt’s sales-tax increase stance may together weigh on risk sentiment
• USD/JPY now down 0.4% at 109.69, vs 109.64-110.24 range
• Related story: Sold by retail investors after trade data

(Bloomberg) -- Ringgit rises ahead of 10-year bond sale which will help to show level of confidence foreign investors have in local currency assets.

• Malaysia to sell MYR4b of bonds due 2026 today
• Yield on 3.955% govt bond due Sept. 2025 dropped 2.5 bps last week to 3.845%
• WTI crude oil futures +0.8% to $48.14/bbl
• Ringgit up 0.4% to 4.0660 per dollar
• USD/MYR - Moving toward 100-DMA resistance, may close March 16-17 gap
  • Resistance: 4.1105, 100-DMA; 4.1175, March 17 high; 4.1315, March 16 low
  • Support: 4.0630, May 10 high; 4.0533, May 18 high; 4.0100, May 17 low;
• Five-year credit-protection costs for Malaysia rose 3 bps last week to 161 bps, according to CMA New York data
• Malaysia’s foreign reserves reported unchanged at 97.2b rgt