Fixed Income Under Pressure Despite Risk Off Tone

Asia-Pac trade saw fresh circa 12-month highs for 30-Year US treasury yields which saw bonds in the region sell off in sympathy. While a $5bn multi-tranche deal announced by Alibaba also likely stole some attention EM sovereigns.

• CHINA: The PBOC matched liquidity withdrawals with injections today, but used the 14-day repo tool as we get closer to LNY. The move indicated PBOC is still cautious over the levels of excess liquidity in the system. The overnight repo rate has risen following the OMOs, the rate is 21bps higher at 2.0761% but still way below the panic driven highs of 3.5698%. Bond futures sold off amid comments regarding a trade blacklist from US President Biden's nominee for commerce secretary.
• INDIA: Wait and see mode for India sovereign debt. Market participants await the RBI meeting on Friday for any measures to support a debt market facing heavy supply after a borrowing binge in 2020 and elevated issuance figures in 2021/22.
• INDONESIA: Indonesian bonds came under pressure from the open after FinMin Indrawati pledged to boost stimulus budget this year to IDR619tn from the previously estimated IDR533tn to better support domestic businesses and health sector amid the worst Covid-19 outbreak in Southeast Asia.
• SOUTH KOREA: The fixed income space in South Korea has come under pressure on concerns that additional bond sales will be required to finance the touted additional budget that will feature handouts to citizens and businesses.