Front End Indonesian Yields Higher Amid Fiscal Concerns, Malaysia GDP Beats

SOUTH KOREA

• A muted end to the week for bond markets with shorter dated yields declining 1.5bps, reflecting equity volatility. Equity markets have had the worst week since April, driving the short end lower.
• Looking ahead, next week the GDP for the second quarter will be released with the forecast for a sharp decline in growth
• 2yr 3.186% 5yr 3.156% 30 yr 3.027%

INDIA

• Bonds yields finished the week marginally lower ahead of next week’s budget release.
• Yields are at 2 year lows and with expectations of a continuation of the same from Narendra Modi’s first budget since re-election (i.e. focus on infrastructure and heavy industry and fiscal prudence). Bonds could see ongoing support into the year end in the face of global volatility despite being at lows.
• 2yr 6.87% 10yr 6.967% 30yr 7.044%

INDONESIA

• Investors gave the appointment of Thomas Djiwandono, President-elect Prabowo Subianto’s nephew, as a deputy finance minister somewhat of a thumbs down, with the cost of insuring Indonesia’s debt against default spiking the most in three weeks with 2 year yields 7bps higher and longer dated securities largely flat.
• The week ahead has little significant data to drive markets and will likely focus on Djiwandono’s comments on fiscal prudence.
• 2yr 6.615% 10yr 6.901% 30yr 7.039%.

MALAYSIA

• Malaysia bucked regional trends of slowing growth with an outsized GDP print, well ahead of analysts surveys.
• The Malaysian economy grew by 5.8% - it’s fastest pace in six quarters
• Front end bonds were unchanged on the day shrugging off global moves, but long ends sold off seeing yields 6bps higher.
• 3yr 3.456% 5yr 3.584% 20yr 4.113%.