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Market Continues To Digest Last Week's RBI

ASIA RATES
  • INDIA: Yields mixed in early trade, curve twist flattens. Bonds ended the day lower on Friday despite a dovish RBI and the announcement of a bigger GSAP 2.0 programme. The size was slightly smaller than expected at INR 1.2tn, and the assumption of inclusion of state debt also spooked some investors. Also adding to negative sentiment was the announcement that the final round of GSAP purchases of INR 400bn this quarter will have INR 100bn allocated to state bonds. Also on Friday the RBI's consumer confidence survey showed a drop in confidence, the current situation index fell to a record 48.5 in May from 53.1 previously with respondents also pessimistic about the year ahead as coronavirus clouds the outlook.
  • SOUTH KOREA: Futures in South Korea are higher, there were reports in the Yonhap that South Korea may collect around KRW 32tn in excess tax revenue this year, potentially securing ammunition to finance another round of an extra budget under review. This would appear to all but confirm comments from FinMin Hong on Friday that extra issuance would not be necessary.
  • CHINA: Futures lower in China, in the cash space 10-year yield touched the highest since May 7 at 3.15%. Trade data showed exports and imports missed estimates though both still rose at a decent clip. The trade surplus widened more than expected in yuan terms but missed estimates in USD terms. In USD terms exports missing broader expectations by a wider margin that imports. The CNY side of the data saw a slightly wider than expected trade surplus, with exports missing broader expectations by a slimmer margin than imports. Repo rates are higher, the overnight repo rate up around 13bps, 7-day repo rate up 4bps to 2.2905% above the PBOC's 2.20% rate.
  • INDONESIA: Yields mixed in Indonesia amid a lack of significant local news flow. Some light twist flattening seen. Bank Indonesia will release the monthly update on foreign reserves tomorrow, with official consumer confidence data coming up Wednesday. Danareksa's consumer sentiment gauge is expected at some point this week.
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