Mixed, China 10YY Hits Record Low, Sth Korean Bonds Pressured By PMI Data

Asian Government Bonds are mixed, with China’s yields lower and South Korea’s sharply higher.

• China government bonds are dealing richer, led by the 10-year. The benchmark 10-year bond yield fell to a low of 2.18%, the lowest level since 2002, amid pessimism about the domestic economy and expectations for further stimulus.
• This came despite China's Caixin manufacturing PMI registering 51.8 in June, up 0.1 points from May. This marked eight consecutive months above the 50 mark and the highest level since June 2021. The new orders sub-index fell slightly but remained above 50. On the other hand, the new export orders sub-index dropped to its lowest in nearly six months, indicating a weakening in overseas demand.
• Elsewhere, the PBoC stated that it had decided to borrow government bonds from some primary dealers recently, to maintain the steady operation of the bond market. (per BBG).
• South Korean sovereign bond curve has shifted cheaper, with yields 2-5bps higher, after today’s PMI data.
• South Korea’s gauge rose to 52, its highest level in two years. In May, the index breached the 50 mark for the first time after months in contraction territory.