Elevated Yields

Yields continue to rise in India and South Korea, while Chinese bonds retain a degree of immunity to machinations in global bond markets.

• INDIA: Yields are higher across the curve, some steepening seen as markets play catch up after being closed for a local holiday yesterday. The RBI will conduct INR 2tn 14-day reverse repo auction today, but there could be some concession ahead of the auctions later, while there is also expected to be some disappointment after the RBI announced a smaller Operation Twist next week, offset by a switch operation.
• INDONESIA: Yields lower across the curve in Indonesia, markets playing catch up after being closed for a local holiday yesterday. Maybank have raised the outlook on Indonesia's bonds to bullish on the basis that yield concession has cheapened the issues, while the BI's willingness to mop up supply is also supportive.
• CHINA: The PBOC matched injections with maturities in today's OMOs, the fifth straight day of no injections, with CNY 30bn drained last week and no fresh cash injected since Feb 25. The overnight repo rate has dropped, down 2bps at 1.7803% - still some 55bps higher than its post-LNY lows, the 7-day repo rate up 8.5bps at 2.0868%. Bonds lower as equities rise.
• SOUTH KOREA: Futures are lower, in the cash space the 10-year yield is 1.6bps higher at 2.034%, up around 40bps from the turn of the year. This could help participation from domestic investors, with foreign buying of South Korean bonds already high – there have only been three days of net selling 2021. The sell-off comes as equity markets rise, while the government announced it would extend social distancing measures by two weeks.