China Easing Sends Rates Lower, Steady Trends Elsewhere

CHINA

• Bond yields gapped lower at the front end following an unexpected cut in the reverse repo rate and move lower in the 1 and 5 year Loan Prime Rates.
• Front end of the curve (2 and 5 year) saw yields 3.5bps lower on the open with longer dated bonds 1.5bps lower in yield, testing the PBOC’s resolve to ward against ultra low bond yields

2yr 1.56% 5yr 1.91% 10yr 2.238% 30 year 2.448%

INDIA

• Bond yields 1bps lower in the front end, flat remainder of the curve despite global volatility in bond markets
• Ahead of Tuesday’s first budget under a new coalition government, Prime Minister Narendra Modi is expected to stick to a plan of curbing the fiscal deficit, while still cutting taxes and boosting welfare spending to keep his allies happy in the coalition.

2yr 6.876% 5yr 6.921% 10yr 6.976% 30yr 7.04%

INDONESIA

• A mixed reaction from investors has put Indonesian bond markets on hold in a day of increased volatility
• News that president elect Prabowo’s nephew has been announced as the new deputy finance minister has some investors worried about Indonesia’s commitment to fiscal prudence.

2yr 6.69% 5yr 6.834% 10yr 6.966% 30yr 7.07%