Market Daily

Fixed Income Market Updates

EUROPEAN AT1

AT1s generally closed -0.125pt to +0.25pts, lagging the broad rally seen in equities, rates and U.S Treasury yields. Flows were lighter than previous sessions but remained skewed to net buying across the space.  

ASIA INVESTMENT GRADE (IG)

Asian IG markets traded on a firm tone with flows skewed to better buying in general. Thus, credit spreads continued to grind tighter, closing 2bps to 5bps on average. In the China IG technology space, buyers continued to add Meituan 2028 and 2029 and Weibo 2030 while the rest of the space (Baba, Baidu, Tencent, JD, Taisem, etc.) remained firm. While there were some profit-taking at tight levels (e.g., Lenovo bonds), these selling flows were well-absorbed. Blue-chip Hong Kong names like AIA, CK Hutchison, and CLP Power as well as Singapore and Thai banks’ Tier 2 bonds were sought after by investors, too. Better buying flows in the Japan insurance space continued with Meiji Yasuda Life Insurance and Nippon Life 2054s finishing the day about 0.5pt higher. 

ASIA HIGH YIELD (HY)

In China HY space, Vanke and GLP curves were 0.25pt to 1.5pt higher. Macau gaming sector also finished on a strong footing (+0.5pt) with better buying flows. Non-China HY space were also active with prices marked 0.5pt to 2pt higher at close. There were two-way flows in low beta names while high beta names with 7%-10% yield saw better buying interests. Low beta Indian HY bonds (e.g., higher quality non-bank financial companies, and renewables) closed +0.25pt to 0.75pt. Meanwhile, Genting complex outperformed (+0.5pt to +2pt) as investors picked up previous laggards Resorts World Las Vegas (+2pt) and New York (+0.75pt).

Forex Market Updates

USD

The US Dollar held onto earlier losses on Thursday after Federal Reserve Chair Jerome Powell failed to offer any strong clues that the U.S. central bank was likely to pause rate cuts in the near-term, after a widely expected 25 basis point reduction. Traders also closed out some profitable bets on a Donald Trump presidency after his election victory on Tuesday.

The Dollar Index could see more consolidation, with support at around 104.00.

GBP

The British Pound rallied sharply on Thursday, solidifying its position as the best performing major currency of 2024, while UK-focused stocks rose after the Bank of England cut rates but indicated future cuts may be more gradual than many had thought. The BoE, which delivered its second rate cut since 2020, said that after Labour Party finance minister Rachel Reeves' high-tax, high-spend budget last week, it expected higher inflation and growth.

Sterling looks to have found support around the 1.2800 handle and could see some resistance at 1.3050.

CNY

The Chinese Yuan recovered from a three-month low to inch higher against the dollar on Thursday, as encouraging export data and state bank support outweighed worries about higher U.S. tariffs on Chinese goods after Donald Trump's presidential election win. China's outbound shipments grew at the fastest pace in over two years in October as manufacturers rushed inventory to major export markets in anticipation of further U.S. and European Union tariffs, with the threat of a broader trade war looming.

USDCNH looks to be more range-bound, with resistance at 7.1700 as markets take profit.

XAU

Gold prices rose more than 1% on Thursday, helped by a retreat in the U.S. dollar, while the Federal Reserve cut interest rates by a quarter of a percentage point as widely expected. At the end of a two-day policy meeting, the U.S. central bank lowered the benchmark overnight interest rate to the 4.50%-4.75% range, with policymakers taking note of a job market that has "generally eased". Traders are currently pricing in another 25 basis point cut by the Fed in December.

While the medium to long term outlook for gold remains bullish, the precious metal could see some near term consolidation with support around 2620.