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Mixed, Haven Bid For Global Bonds Fades, Korean Exports Hold Strong

ASIA RATES
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Asian Government bonds are mixed as sentiment recovers from Friday's Middle East escalation-induced dip. Cash US tsys are 2-4bps cheaper across benchmarks during today’s Asia-Pacific session, with a steepening bias, as the market continues to pare Friday’s rally.

  • China Government Bonds are dealing flat to slightly richer across benchmarks, with a modest steepening bias. News flow has been light, apart from the 1- and 5-year Loan Prime Rates remaining unchanged at 3.45% and 3.95% respectively.
  • South Korean Sovereign Bonds, on the other hand, are 2-6bps cheaper for benchmarks beyond the 1-year. Alongside the diminishing demand for global bonds as safe-haven assets, the domestic market might have experienced pressure from recent data indicating sustained export growth in April, albeit potentially leading to a wider trade deficit for the month.
  • The first 20 days of trade data for April held close to equivalent March levels, with the print coming in at 11.1% y/y. Imports were up 6.1% y/y, while the first 20 days trade deficit was -$2.65bn. Note for the first 20 days of March the trade deficit was -$711mn.
  • Accordingly, recent intervention comments from BoK Governor Rhee are likely to continue to exert pressure on the market, particularly given the perceived weakness of the Won against the backdrop of improved exports.
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Asian Government bonds are mixed as sentiment recovers from Friday's Middle East escalation-induced dip. Cash US tsys are 2-4bps cheaper across benchmarks during today’s Asia-Pacific session, with a steepening bias, as the market continues to pare Friday’s rally.

  • China Government Bonds are dealing flat to slightly richer across benchmarks, with a modest steepening bias. News flow has been light, apart from the 1- and 5-year Loan Prime Rates remaining unchanged at 3.45% and 3.95% respectively.
  • South Korean Sovereign Bonds, on the other hand, are 2-6bps cheaper for benchmarks beyond the 1-year. Alongside the diminishing demand for global bonds as safe-haven assets, the domestic market might have experienced pressure from recent data indicating sustained export growth in April, albeit potentially leading to a wider trade deficit for the month.
  • The first 20 days of trade data for April held close to equivalent March levels, with the print coming in at 11.1% y/y. Imports were up 6.1% y/y, while the first 20 days trade deficit was -$2.65bn. Note for the first 20 days of March the trade deficit was -$711mn.
  • Accordingly, recent intervention comments from BoK Governor Rhee are likely to continue to exert pressure on the market, particularly given the perceived weakness of the Won against the backdrop of improved exports.