Key Data On The Docket Today

Key US data and coronavirus are the main drivers for the Asia bond space; South Korea vows to step in if bond markets become too volatile.

• INDIA: Yields lower in early trade. Markets await inflation and industrial production data today. CPI is expected to have slowed last month as the effects of a surge in virus cases took hold, while industrial production is expected to surge due to a low base effect. INR denominated debt sales are expected to slow this week for the third consecutive week, the coronavirus situation is clouding the outlook with many companies having already suspended operations. The RBI will go ahead with its planned INR 260bn bond sale tomorrow. As a note, Indian markets will be closed tomorrow for Ramzan.
• SOUTH KOREA: Futures gapped lower at the open but have come off worst levels, the decline pausing around 125.30, the lowest for the contract since March. Data earlier showed the unemployment fell to 3.7% from 3.9%, lower than estimates. Second Vice Finance Minister said yesterday South Korea plans to respond to potential volatility in the state bond market as global inflation concerns and other risk factors could spark instability in the debt market.
• CHINA: The PBOC injected CNY 10bn today, repo rates have risen, overnight repo rate up 17bps at around 1.95%, while the seven day repo rate is flat at 1.90% after initially opening higher. The PBOC has now injected funds for the fourth day in a row. Futures are higher, 10-year contract briefly touching a contract high. An article from a senior researcher at the MOF said China should raise the amount of new local government bonds and allow hidden debts to be swapped with these bonds in order to reduce liquidity risks.
• INDONESIA: Markets closed for Hari Raya Aidilfitri.