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Broad Sell-Off Seen

  • INDIA: Yields higher in early trade. Indian markets return today after a public holiday yesterday, bonds are playing catch up with a decline in US tsys during the market closure. Markets will focus on the RBI's GSAP operation, the Central Bank will purchase INR 200bn of bonds from the market, the RBI has included less liquid issues in its purchase operation which could support the market later in the session. Issues included are 6.18% 2024, 6.7% 2026, 8.60% 2028 and 6.79% 2029.
  • SOUTH KOREA: Futures in South Korea are lower for the first time in four days, falling out of favour as equity markets rise even in the face record COVID-19 numbers. South Korea reported record daily COVID-19 cases for the second day, there were 1,842 new cases with authorities noting mass infections from a virus-hit Naval unit, while it seems increasingly likely officials will extend the toughest virus restrictions in the wider Seoul area. Concerns are also rising over the delta variant, which has fast become the nation's dominant strain constituting 76% the past week. Elsewhere Fitch affirmed South Korea at AA- with a stable outlook and gave a positive assessment.
  • CHINA: The PBOC matched maturities with injections at OMOs today, repo rates are off yesterday's highs though the overnight rate is higher on the session after plunging into the close yesterday. The 7-day repo rate retreats from opening highs of 2.25%, 5bps above the PBOC's rate. Futures are lower after a four day rally, even as equity market struggle to make upward progress. Elsewhere recent premiums for local bonds over central government issues continue to shrink, while banks in Hong Kong suspended new mortgages for Evergrande's unfinished projects.
  • INDONESIA: Yields mixed, the wings higher while the belly is lower. Markets await the BI's interest rate announcement later in the session. Policymakers are expected to hold their benchmark policy rate unchanged by virtually all analysts. Elsewhere, FinMin Indrawti said late Wednesday that the government will utilise IDR 186.67tn of surplus from last year's budget to help finance the 2021 spending plans. Yesterday's bond auction saw the highest bids since January.

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