Mixed, But Off Worst Levels; Auctions & OMOs Eyed

A drop in US yields made Asia debt more attractive, lower equity markets also boosted the appeal of sovereign debt markets, but some selling seen after China state funds were seen buying equities.

• INDIA: Space supported after a drop in US yields. Markets await the results of INR 216.7bn of bond sales by the state government for cues on investors' appetite for debt. Participants also await the increased purchase size Operation Twist.
• INDONESIA: Sovereign debt extends its drop ahead of the IDR 12tn sukuk auction later today, 10-year yields have gained around 25bps in the past three days.
• CHINA: The PBOC matched liquidity injections with maturities today, meaning the last liquidity injection was on Feb 25, with CNY 30bn being drained during that time. The overnight repo rate has jumped, last up 30bps at 2.0145%. Bonds futures are lower, 10-year future at sessions lows last down 0.220 at 96.94. Futures had been flat, with equity markets plunging, before China state funds stepped into buy equities, pushing markets back into positive territory and sapping support for fixed income.
• SOUTH KOREA: Bonds under pressure in South Korea, futures lower but off earlier worst levels. Decline in 10-year future is shallower after the Bank of Korea announced it will buy up to KRW 2tn of government bonds via auction today to improve liquidity in the bond market, the bank announced in February it would buy KRW 5tn - 7tn of government bonds in the first half of 2021.