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ASIA: Bond Yields React to the FED’s Hawkish Cut. 

ASIA
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  • The Fed’s move overnight presented a gift with one hand and took it away with the other in the market reaction today.
  • The major currencies were weaker across the board today, a move that if sustained could make their exports more competitive but their cost of funding (i.e. the bond market) saw higher yields.
  • The FED’s rate cut was accompanied by guidance on potentially two rate cuts in 2025, much less than was priced in and saw bonds sell off, driving yields higher.
  • Major Asian markets have followed this lead today with some outsized moves.
  • The Philippines (ahead of tonight’s rate decision by the BSP) has seen the largest sell off with the 10YR yield +8.5bp to 5.315%.
  • Malaysian yields were not immune with the 10YR +5.7bp to 3.872%.
  • Indonesia yields, just a day after their Central Bank held rates steady has seen their currency under real pressure and bond yields higher with the 10YR +4.5bps to 7.09%.
  • South Korean markets have moved significantly lower in yields in recent weeks given the political turmoil and some of that has unwound today with the 10YR  +4.5bps to 2.806%. 
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  • The Fed’s move overnight presented a gift with one hand and took it away with the other in the market reaction today.
  • The major currencies were weaker across the board today, a move that if sustained could make their exports more competitive but their cost of funding (i.e. the bond market) saw higher yields.
  • The FED’s rate cut was accompanied by guidance on potentially two rate cuts in 2025, much less than was priced in and saw bonds sell off, driving yields higher.
  • Major Asian markets have followed this lead today with some outsized moves.
  • The Philippines (ahead of tonight’s rate decision by the BSP) has seen the largest sell off with the 10YR yield +8.5bp to 5.315%.
  • Malaysian yields were not immune with the 10YR +5.7bp to 3.872%.
  • Indonesia yields, just a day after their Central Bank held rates steady has seen their currency under real pressure and bond yields higher with the 10YR +4.5bps to 7.09%.
  • South Korean markets have moved significantly lower in yields in recent weeks given the political turmoil and some of that has unwound today with the 10YR  +4.5bps to 2.806%.