China Repo Rates Rise

Local dynamics in play despite heavy losses in equity markets. Positive data in Indonesia sees yields rise while conflicting signals in South Korea results in futures treading water.

• INDIA: Participants will scrutinize an INR 125bn sale of state debt today for indications as to appetite for Indian debt. Pressure grows in Indian PM Modi to declare a nationwide lockdown, even as individual states begin to impose stricter curbs. There are now over 4,000 daily deaths attributed to COVID-19. The sell side has started trimming estimates for growth, a trend that is likely to accelerate should a national lockdown be imposed.
• Markets await a data dump tomorrow including inflation and industrial production.
• SOUTH KOREA: Futures failed to make any decisive gains and head into the close broadly flat. Data earlier showed South Korea's exports soared 81.2% Y/Y in the first 10 days of May as shipments of chips, autos and petroleum goods remained robust amid a global economic recovery. South Korea reported 511 new cases of coronavirus in the past 24 hours, back above 500 after a brief dip below. South Korea is also in talks with the US to quickly secure COVID-19 vaccines. In the cash space yields are slightly lower, but moves are muted despite heavy selling in equity markets. Second Vice Finance Minister Ahn Do-geol hosts meeting to review govt bond market at 0900BST/1600KST.
• CHINA: China matched liquidity maturities with injections again after a CNY 10bn injection yesterday, repo rates rose but have come off highest levels. CPI was slightly softer than expected while PPI rose above estimates again. Futures rose from the off, 10-year meeting resistance around 98.18. Latest data from ChinaBond showed foreigners were net buyers to the tune of CNY 52bn in April after being net sellers in March for the first time in two years.
• INDONESIA: Yields higher across the curve with some bear flattening seen, data showed Indonesia's retail sales rose 9.8% Y/Y in March, while Intertek data showed that Indonesia's palm oil exports rose by a quarter in April vs. a year before. Elsewhere markets digest comments from the finance ministry over proposals to increase tax revenue including higher VAT.