Halister News

(Bloomberg) -- The Philippine central bank is expected to leave its overnight borrowing rate unchanged tomorrow as the level of inflation still indicates that the government’s goal will be met, Bloomberg strategist David Finnerty writes.

• Bangko Sentral ng Pilipinas will keep the rate at 4.0%, according to all 13 economists in a Bloomberg survey; decision due at 4:00pm local time
• Gov. Tetangco said last week he saw no pressing need to change monetary policy at the moment
• At its Feb. meeting, the central bank lowered its inflation forecast for 2016 to 2.2% y/y from the 2.4% projection made in Dec.
• Gov. Tetangco said BSP would retain policy flexibility given El Nino risks in the medium-term and also near-term volatility concerns in both the commodity, financial markets
• Feb. CPI rose 0.9%, down from 1.3% in Jan. but still within the bank’s forecast range of 0.9%-1.7% for the month
• BSP said the level continued to support its outlook of within-target inflation over next two years, adding that the lower reading was largely fueled by the decline in prices of selected non-food items

• 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) -- Yields on 30- and 40-year Japanese government bonds fall to fresh low; nation’s All Industry Index likely rose 1.9% on-month in January, most since April 2011, according to median estimate in Bloomberg survey; BOJ Deputy Governor Nakaso says it is possible to cut rates further.

• China lowers yuan reference rate for second day; won’t use depreciation to boost exports: Premier Li; PBOC says media reports of governor Zhou encouraging individuals to invest savings in stock market were misinterpretations
• U.S. Treasuries little changed, with yield on 10-year bonds at 1.912% in Asian trading; data today should show U.S. Markit preliminary manufacturing PMI rose to 51.9 in March from 51.3 in February: Bloomberg survey
• Aussie advances after two-day drop against dollar; Australia’s fourth-quarter house price index rose 0.2% from previous quarter, least since third quarter 2012; U.S. says it voiced concern in 2015 about Australian statements on the desired direction of the exchange rate
• Kiwi snaps two-day decline against dollar; S&P affirms New Zealand’s AA foreign currency long-term rating and AA+ local currency long-term rating; outlook remains stable
• Rupiah drops for third day; Indonesia can resolve tax amnesty if parliament is too slow in approving law revision: Cabinet Secretary Pramono Anung
• Won recovers from earlier drop; South Korea’s domestic demand and exports show signs of improvement, but economic situation isn’t easy and government will preemptively respond to risks: Finance Minister Yoo; North Korea fired short-range projectiles off east coast yesterday, according to South Korea
• Taiwan’s dollar advances; island’s unemployment rate was 3.94% in February, highest since August 2014; median estimate was 3.93%

(Bloomberg) -- Slowing domestic demand could prompt a second straight monthly decline in Philippines’ imports in January, economists’ expectations suggest.

• Imports probably fell 15.6% y/y following an unexpected 25.8% decline in Dec., according to the median est. in Bloomberg survey; ests. range from -23.3% to -2.5%; data due 9am local time tomorrow
• Economists also expect that a trade deficit of $220m has opened up, following a $603m surplus in Dec., a separate survey shows
• The country needs to consider domestic sources of growth in a fragile global environment, BSP governor Tetangco said earlier this month
• Other data released this month showed the nation’s exports fell 3.9% y/y in Jan., worse than the expected 0.4% gain
• Peso rose 0.1% vs dollar to 47.610 on Feb. 24 when data showed Dec. imports fell 25.8% y/y, the first contraction in seven months; pair is now at 46.330

--CRYSTAL CHUI

(Bloomberg) -- Peso snaps four-day winning streak ahead of central bank policy meeting tomorrow.

• Policy makers will hold overnight borrowing rate, according to all 13 economists in Bloomberg survey
• Global investors bought net $23.1m of local equities yesterday, eighth straight day of inflows that marks longest stretch since Jan. 4, according to exchange data
• BSP reviewing regulations to prevent money laundering, Deputy Governor Espenilla says
• Local gasoline prices rise for fifth straight week, Philippine Star reports
• Peso falls 0.1% to 46.380 per dollar, according to bankers’ association data; USD/PHP 10-DMA is below 200-DMA for first time since May 4
• Peso’s one-month forwards rise 0.1% to 46.43 per dollar
• Favorable domestic demand and benign inflation environment suggest BSP will remain on hold during 2016, BMI Research writes in note dated March 21; concerns that increased financial volatility may arise from normalization of U.S. rates another factor for central bank to stand pat
• Yield on 8% govt bonds due July 2031 rises 8 bps to 4.1250%, according to Tradition pricing

(Bloomberg) -- The spread between SGD 5y5y forward interest-rate swaps and vanilla 5y swaps is little changed in the past two months but could rise toward its 200-DMA of 106 bps if a budget deficit is announced on March 24, Bloomberg strategist Mark Cranfield writes.

• Spread now at 88 bps versus this month’s low of 83 bps, which is slightly above January’s 82 bp low; click here for chart
• Singapore may retain a spending deficit for 2016/17 in the annual budget, keeping modest upward pressure on long-term rates; see budget preview here
• 5y5y swaps at 2.9008%; down 68 bps this year
• 5-year swaps at 2.0250% bps; down 56 bps this year
• NOTE: Mark Cranfield is an FX strategist who writes for Bloomberg. The observations he makes are his own.