We think currencies will do more of the legwork for returns from Asian macro this year. Our constructiveness on Asian FX is driven by the increasing evidence of a turn in the exports cycle, the promise of QE driven portfolio flows, and increased central bank accommodation of currency strength. We expect the EARLY index to break to new highs in 2013. Our favorite regional longs are PHP and CNH. We have a broadly more cautious stance on duration, and are inclined to look for cheap ways to scale into bear rates positions across the region (with the exception of India).
 China: Front end of the repo curve should remain well anchored ahead of Lunar New Year. We hold 2Y/5Y steepeners, and are neutral on cash bonds, given growth and supply risks.
 Hong Kong: Periodic bouts of global risk aversion will likely continue to trigger flight to safety in HK. We like 5Y/10Y Hi-Li flatteners.
 India: We stay overweight on duration, and are keen to add on back up in yields. The currency will continue to be volatile, but we see value in owning some near term downside in USD/INR through put spreads and RKOs.
 Indonesia: We are moving to small underweight on duration in light of the recent richening of the curve; and maintain our strategy of collecting 3M NDF points when implied yields fall below 3%.
 Malaysia: We like paying 5Y swap spreads on dips. Strong technicals will prevent a disorderly sell off in MGS even in the instance of higher UST yields.
 Philippines: Peso is our favorite currency in the region. The current account continues to improve, portfolio momentum is strong, and BSP will face even more constraints this year to its intervention.
 Singapore: We are tactically short on SGDNEER given its position in the band, but would take it back if the trade moves any closer to the mid of the band.
 South Korea: We are tactically bullish on KTBs with a flattening bias, and we are not inclined to chase the rally in 3X6 and 6X9 FRAs. We are also reluctant to chase the short JPYKRW trade, which has closed in on our target, but would be keen to add to the trade on pull backs towards 12.5.
 Taiwan: The Taiwanese rate market remains vulnerable in our opinion to both back up in UST yields, as well as its own supply risks.
 Thailand: We like owning linkers in Thailand, versus nominal bonds, given the valuations, the improvement in global macro conditions, and the strength in local inflation dynamics driven by food prices and minimum wage hikes.