China Data Supports Bid Tone

Misses in the Chinese data changed the complexion of the session and helped keep bonds supported, while surges in US Treasuries yesterday saw local markets play catch up.

• INDIA: Bonds sold off sharply yesterday, and remain under pressure today, though a global bid tone is helping support the short end. the RBI conducted its first GSAP purchases yesterday but bond yields rose after the operation. The disappointing results cast doubts on the efficacy of the programme at a time when a dramatic uptick in coronavirus cases threatens to shutdown large parts of the economy. The RBI will auction INR 260bn of bonds today, demand at the auction could struggle, meaning primary dealers could be left to rescue the sale again.
• SOUTH KOREA: South Korean bonds are higher after selling off post BoK yesterday. The number of COVID-19 cases remains elevated, while a smooth 50-year auction also helped support demand. The MOF sold slightly more than advertised with a solid jump in bid/cover ratio.
• CHINA: The China data dump was overall slightly weaker than expected, which saw bond futures erase losses. GDP was a slight miss at 18.3% against expectations of 18.5%, industrial production also below estimates by 2ppts at 24.5%, while fixed asset investments missed by 0.4ppts at 25.6%. One bright spot was retail sales at 33.9%. These figures are strong on an objective basis, but benefit from a low base effect, and the misses against estimates indicate the recovery is progressing slightly more slowly than expected.
• INDONESIA: Yields lower for a third day in Indonesia. Bank Indonesia will publish Feb offshore borrowings data and Mar survey of bank financing demand and offer today. Elsewhere, the Finance Ministry holds a discussion on state assets.