Via ANZ Research
On bonds and Asia FX since the election:
- US bond yields and the US dollar continue to rise
- Market sees upside inflation risk in the US from a Trump administration
- As a result, Asian currencies continue to come under pressure (ANZ's USD/Asia index has risen to its highest level since late February 2016, and is 1.5% off from its January high)
'Trump tantrum' vs. the 'Taper tantrum'
- Comparing the "Trump Tantrum" with the "Taper Tantrum" episode of 2013 ... this time USD/Asia is being driven higher by both the rise in US yields and stronger US dollar. In 2013, it was only US yields that were driving USD/Asia
- During the taper tantrum period, portfolio outflows from Asian bonds and equities totalled USD38bn between June and August 2013. Last week, outflows from Asian equities alone totalled USD3.3bn, so there could be further to go
- One difference between the Trump and taper tantrum is that the RMB was still appreciating during the latter period, going against the weakening in Asian currencies.This time, RMB is joining in the broad-based weakening against the USD.
