Asian (Positive) Contagion - EM FX, Bonds, Stocks Surging

First, the bad news; the un-Taper-inspired collapse in the USD is not helping the JPY weakness that Abe desires and the NKY is now 200 points off its US day-session highs (though still green from yesterday) and the JASDAQ is red. But everywhere else there is much rejoicing... EM FX is back at 5 to 6 week highs with MYR, INR (fwds), and IDR all having major surges. Equity markets are green in general but the Philippines PSEi (+3%) and Indonesia's JCI (+4% but was +7.7% at one point) are an illiquid mess of over-exuberance. Gold, US Treasuries, and US equity futures are all holding gains or inching slightly better. Thai bonds are 22bps lower in yield, Indonesia -10bps, but Indian bonds for now are quiet. MSCI's AsiaPac Ex-Japan equity index is now back at highs from May 2011, having risen 12 of the last 16 days for a 9.7% gain. While the moves are large, they are not unprecedented and certainly don't signal a wholesale charge back in of new hot-money since volumes remain on the low side for now.

The Nikkei is not all that happy... trading below the US close still...

 

but EM FX is on fire... with Rupee forwards surging (lower is striong Rupee)...

 

and the other big winner - Jakarta stocks... (for now)...

 

as MSCI AsiaPac (ex-Japan) stocks regain 28 month highs after a ~10% rally in the last 2 weeks...

 

Charts: Bloomberg

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