Cheaper With Global Bond Market Trends

Asian Government Bonds are cheaper in line with recent global market developments.

• China Government Bonds are dealing ~1bp cheaper across benchmarks after onshore media urged local investors to be cautious around speculative trades in the recent ultra-long bond issuance (per BBG).
• Chinese President Xi Jinping urged deeper reforms for some of the country’s key sectors as investors look for hints on major policy shifts designed to prop up a weakening economy. Xi said areas including property, employment and childcare are in need of reform breakthroughs at a symposium in Shandong province on Thursday, according to a report by the Xinhua News Agency. (See link)
• The firmer US yield backdrop is pushing US-CH 2yr yield differentials back close to late April cyclical highs (last +313bps). The 2yr CGB yield yesterday broke below 1.80%, which had marked recent lows. It is currently 1.79%.
• South Korean Sovereign Bonds are also heavy, with yields 1-4bps higher as the market continues to digest the recent BoK policy decision.
• Most sell-side analysts look for BoK easing to commence in H2, albeit with varying views on the timing of the first cut.