Bond Space Mixed In Asia

Back to back gains in US equity markets inspired risk on sentiment in Asia which saw regional equities gain for the third day and put pressure on the bond space, but some local dynamics also in play.

• CHINA: Yields are higher across the curve in China, the move exacerbated by sales of 1-,3-,7-year paper. The supply was digested smoothly, with demand particularly strong in the 7-year sector. Curve bear flattens 10-year yield up 1.8bps.
• KOREA: Yields slightly lower across the curve in South Korea, some bull steepening, 10-year yield down 0.4bps. Some caution around a pick-up in COVID-19 cases cited as rationale. Bank of Korea sold KRW 2.4tn 2-year paper, markets look ahead to 50-year supply on Friday.
• INDIA: Cash yields were lower ahead of the RBI meeting on Feb 6. Having already cut rates five times in 2020 and with inflation well above the central bank's target, there's limited scope for further cuts. Some bull steepening seen, 10-year yield down 3.4bps.
• INDONESIA: Mixed performance on the curve, 10-year yield last down 1.5bps. The government sold IDR 35tn of bills and bonds yesterday, with cover far exceeding the previous auctions.