Auctions In Focus

Futures rise in South Korea and China even as equity markets rise, focus in India falls on today's auction.

• INDIA: Yields higher in early trade with some flattening seen. Markets will digest industrial production and CPI data released late on Wednesday before a holiday yesterday. The near term outlook remains clouded by the current surge in COVID-19 cases and lockdowns in several states. Bloomberg estimates that around 60% of the country's GDP is in full lockdown with much of the remaining in partial lockdown. Wholesale price inflation is due later in the session while bond traders will focus on the results of the INR 260bn bond auction today.
• SOUTH KOREA: Futures in South Korea are higher in sympathy with the US tsy move yesterday. Data earlier showed South Korea's export price index rose 10.6% in April from 5.9% in March, the import price index rose 15.0% from 9.0% in March. The MOF sold KRW 400bn of 50-year bonds, a 13bps yield concession and reduced auction size helped support demand.
• CHINA: Futures higher but off best levels, the PBOC has said it can use tools other than monetary policy to moderate commodity prices after another jump in PPI earlier this week. The PBOC matched maturities with injections today, repo rates have declined; overnight repo rate down 1bp at 1.7893%, the seven-day repo rate is down 6.15bps at 1.9962%. Elsewhere corporate bond spreads have tightened after Huarong asserted its preparedness for upcoming bond repayments and said support from the Chinese government remains in place. The comments are intended to assuage concerns after media reports that regulators were concerned over the restructuring plan.