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Indonesia lagged peers as markets assess the dovish Bank of Indonesia rate announcement yesterday, the RBI will hope a successful GSAP operation will translate to a robust auction later today.

  • INDIA: Yields lower in early trade. Yesterday the RBI conducted its final operation under GSAP 1.0, the Bank purchased INR 345.8bn of sovereign debt, more than the INR 300bn expected (INR 54.25bn of remaining allocation given to state securities). The RBI bought INR 267.8b of 5.85% 2030 bonds at a cutoff yield of 5.9910%, lower than the 6% estimated. The RBI will sell INR 320bn of debt at auction today.
  • SOUTH KOREA: Futures higher in South Korea with the 10-year hitting a contract high. Yields lower with a touch of steepening seen. Today's 10-year inflation linked bond auction was successful, bid/cover rose from the previous auction with participants now considering a more hawkish BoK after the release of minutes this week. Markets continue to focus on comments from the MOF yesterday that the government would step in to stabilise markets if needed. Elsewhere, Bloomberg data shows South Korea sold $105.3bn worth of bonds in 2021 so far, Issuance was up 0.5% compared to the same period last year.
  • CHINA: Futures slightly higher in China but off best levels, a spike at the open was retraced throughout the session. Repo rates rose as the PBOC maintained liquidity again, both the overnight rate and 7-day rate are within recent ranges. China sold 50-year upsized bonds at yield of 3.8097%, the sale was covered 2.65x. Long end bonds have seen a sell off recently over increased municipal issuance concerns, there has been speculation the steeper yield curve compared to the US could make Chinese debt more attractive. The 10-/30-year spread is the widest in four months.
  • INDONESIA: Bonds sold off, yields higher across the curve, some steepening seen. Bank Indonesia left its benchmark interest rate unchanged for the fourth time in a row and stuck to familiar economic projections, with Gov Warjiyo noting that the decision was "consistent with our low inflation projection and maintained rupiah stability and efforts to strengthen the national economic recovery". The Bank pledged to keep monetary policy accommodative. On a different front, Pres Widodo told Jakarta authorities to expedite Covid-19 vaccine rollout in order to reach herd immunity by Aug. Jakarta Gov Baswedan backed the President's call, but some health experts have doubted if the target was realistic.