India Sees Some Auction Set-Up

Repo rates drop sharply in China despite a lack of additional PBOC liquidity, Indian auctions in focus after RBI measures earlier this week and operation twist success.

• INDIA: Yields a touch higher early on with the curve bear steepening. The RBI will today auction a total INR 320bn of securities from four lines, yields have fallen in recent days after RBI Governor Das outlined a raft of new measures to support the economy and the bond market. The RBI will also conduct INR 2tn 14-day reverse repo today. Yields fell yesterday as the RBI conducted INR 100bn operation twist, under the operation the bank filled its whole allocation with 5.85% 2030 bonds and did not buy any of the 2026 or 2028 bonds.
• SOUTH KOREA: Yields and futures move in the same direction, lower. Futures drop after an upbeat assessment of the economy from Vice Finance Minister Lee who said he saw growth above previous estimates, while the MOF conversion offer helps suppress cash yields.
• CHINA: The PBOC matched maturities with injections today after draining CNY 40bn yesterday. The last time the PBOC injected liquidity into the system was Feb. 25. The overnight repo rate fell 27bps to 1.7888%, the seven-day repo rate fell 1.9746%. Futures are higher again for the third session (including a gap for the Labor Day break) but came off best levels after strong trade data; the trade surplus widened on soaring exports. Elsewhere, Huarong has said it has transferred the funds needed to fulfil five offshore bond coupons due today. Corporate bond spreads have widened though as yields in government securities decline.
• INDONESIA: Yields mostly lower across the curve. The Jakarta Post circulated the results of the 2021 Edelman Trust Barometer, which showed that 89% of Indonesians are concerned about losing their jobs, which is more than the 65% worried about potentially contracting coronavirus. Elsewhere a Fitch report asserted that the pace of the recovery will be capped by the persistence of the virus in Indonesia.