Daily Briefs

• Fed’s “risk management cut” and a dovish outlook of 2 more cuts in 2025 are driving foreign flows back to Asia. US$11.5bn inflows in September till date underscores the sentiment.
• Korea (US$4.94bn) and Taiwan (US$7.5bn) grabbed the Asian flows entirely, driven by the rejuvenated AI capex theme. India (-US$904m) continues to be sold, though the selling pace has diminished.
• FIIs bought Indonesia (US$672m) in August and sold almost identical amount in Thailand. Philippines, despite being cheap and having a few sectors with upward earnings inflection, continues to be sold.

• Despite initial concerns about tariffs and policy uncertainty hurting global economy, many major metals have seen significant price gains this year
• Tariffs have been implemented, but manufacturers have absorbed costs in margins rather than passing them on to consumers
• Despite signs of economic strain in recent data, commodity prices remain strong due to US dollar weakness making commodities more affordable for importing countries

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• While Southeast Asian economies have often been grouped under one label, differences in trade, technology, and institutions warrant a more differentiated lens. 
• A group of high performers consisting of Vietnam, Malaysia, and Singapore offers expansive trading relationships, global value chain participation, and political resilience. 
• In contrast, Thailand and Indonesia’s prospects are stymied by reliance on legacy industries or commodities, less open trading arrangements, and chronic institutional fragility.

• Despite a mixed Fed meeting, EM markets continue to rally in FX and rates
• EM local markets still in a good place with upside potential in growth and improving flow picture
• Sovereign credit markets have had a strong performance year to date, with investors feeling optimistic but also acknowledging the need to be humble in assessing macro risks and valuations.

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• The Federal Reserve is expected to ease interest rates by 50 basis points this year, aligning with a forecast of 100 basis points of easing by next January.
• The Fed prioritizing its labor market mandate over its inflation target may lead to better growth and higher inflation outcomes next year.
• The yield curve has been volatile but is currently fairly valued, with potential for steepening due to asymmetrically dovish reaction function and Fed independence considerations.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Crude oil futures opened the week slightly firmer as traders continued to monitor disruptions to Russian flows amid ongoing attacks against infrastructure and sanctions threats.
• Front-month Nov25 ICE Brent futures were trading at $67.22/b (0735 BST) versus Friday’s settle of $66.68/b, while Nov25 NYMEX WTI was at  $62.90/b against a previous close of $62.40/b.
• The prospect of tighter measures against Moscow was seen increasing with European leaders pushing for a wider rollout, including secondary tariffs.

• China agreed to move forward with trade talks after reaching an agreement to sell control of TikTok to U.S. companies.  The threat to shut it down was a “paper tiger”.
• China has neutralized a major leverage point by instructing its companies to not buy Nvidia chips.  Instead China will rely on homegrown technology for companies like Huawei and Alibaba.
• For the first time since the 1990’s China has not purchased any U.S. soybeans since the start of the export season. Soybean spot prices for Midwest farmers are below cost.

• The US’s broadening protectionist arsenal against India creates substantial headwinds for the country’s economic outlook. 
• The H-1B visa fee hike has limited impact. But it does raise concerns of future curbs on US offshoring, and follows the steep tariffs on India’s goods imposed last month.
• A tactical truce with the Trump administration would allow India to prioritise its reform agenda with fewer external distractions.

• Gold’s current low-volatility phase, following its ascent to all-time highs, presents a strategic vol trading opportunity. This environment is characterized by steady gains and reduced expected downside.
• Recent market trends, including investor and institutional support levels, suggest that strategies designed to profit from time decay could be beneficial, noting the stability of physical flows, contained intraday volatility.
• While a short-term trading regime focused on range consolidation is indicated, potential risks from geopolitical shifts or unexpected central bank communications could quickly reprice gold’s volatility.