Coronavirus Concerns Across Asia Weigh

Coronavirus concerns across Asia weigh, price action mixed.

• INDIA: Bonds under pressure. The coronavirus situation continues to deteriorate, Indian PM Modi is due to hold meetings with stakeholders and officials to review conditions. Several countries have now banned visitors from India, Singapore the latest. The main focus of the MPC minutes was the COVID resurgence and concomitant growth risks, with members downplaying input-cost driven inflation risks and emphasizing the need to continue the accommodative policy mix until the nascent growth recovery gathers momentum. There was a discussion of options to expand the GSAP. Markets await auction results and the RBI's reverse repos.
• SOUTH KOREA: Bonds lower after earlier being in positive territory. markets still waiting on the linker auction. The coronavirus situation continues to worsen. South Korea reported 797 daily new virus cases today, nearing 800 as growing untraceable cases, coupled with cluster infections, continued to hamper the country's virus fight against the pandemic. Officials have said they are preparing to import J&J's Covid-19 vaccine as scheduled after the inoculation was approved for use by the EU drug regulator, saying benefits outweighed risks. There is no timetable for the import, but it was previously announced South Korea would take 6m doses from Q2.
• CHINA: Futures lower alongside regional bonds as mainland Chinese equity markets rise. China's SAFE was on the wires saying foreign holdings of Chinese bonds is expected to rise, and that China's economy facilitates this. There were also reports that the PBOC may expand liquidity in May to fill in a gap of CNY1 trillion due to the upcoming local government special bond issuances and tax remissions, most likely via MLF. Corporate bond spreads hit their tightest levels since mid-March. Some of the panic around Huarong is receding, while the chairman of the Shanxi State-owned Capital Operation said government in Shanxi province, China's top coal-producing region, won't allow any debt defaults by local SOE's.
• INDONESIA: Yields higher across a curve, bear steepening seen. FinMin Indrawati reaffirmed the gov't's 2021 GDP forecast of +4.5%-5.3% Y/Y, anticipating a rebound in consumption starting this quarter, owing to the gov't's stimulus measures & confidence in vaccine roll-out, while Indonesia has extended the travel ban during Ramadan & Eid al-Fitr through May 24, while tightening movement restrictions. Elsewhere, there were reports that the government is considering a sale of Samurai bonds as early as May. The finance ministry announced it would attempt to sell IDR 30tn of debt next week.