BoK To Purchase KRW 1tn Of Govt Securities Today

South Korean bonds drop despite BoK purchase, India continues to grapple with the pandemic, while China faces prospect of lower growth on structural issues.

• INDIA: Yields higher in early trade after dipping yesterday. The coronavirus situation continues to concern as the number of deaths approaches 200k. Market participants will scrutinize today's INR 360bn bill sale for indications of market demand for government securities, and to see if the RBI attempts to influence the sale, which could be a portent for the bond sales on Friday. The RBI announced a smaller auction calendar for Friday's sale, a total INR 260bn compared to a planned INR 320bn last week that only saw INR 220bn go ahead.
• SOUTH KOREA: Futures lower in South Korea, dropping sharply at the open after grinding out small gains yesterday. The BoK reported yesterday that it would purchase up to KRW 1tn of government securities from the market today, the BoK has previously announced it will buy KRW 5tn – KRW 7tn of bonds in the first half of the fiscal year. In a worrying sign South Korea reported 775 daily new coronavirus cases in the past 24 hours, the highest in four days and nearing 800, and the proportion of untraceable infections hit the highest point ever amid concerns of another wave of the pandemic.
• CHINA: The PBOC matched maturities with injections for the thirty seventh straight session, the last time the bank injected funds into the financial system was Feb 25. The overnight repo rate is higher on the day at 1.7717% but still below yesterday's high around 1.83%. The 7-day repo rate slightly lower at 2.1289%, back below but hovering around the PBOC's 2.20% rate. Futures are higher, 10-year future seeing the most upside while moves in 5- and 2-year futures are more muted. China Huarong Asset Management repaid an offshore bond yesterday with funds provided by Industrial & Commercial Bank of China , the nation's largest state-owned bank, according to Bloomberg reports. The moves follows a request by the financial regulator for banks to extend loans to Huarong by at least six months to help the company refinance debt.
• INDONESIA: Yields higher, moves mixed across the curve. Indonesia's bond auction yesterday drew higher demand than the previous offering in April, this was the last auction until May 25. Indonesia received bids of IDR 52.7t at the auction, up from IDR 40.2t at the previous sale.