Mixed, South Korean Bonds Play Catch-Up Following Yesterday’s Holiday

Asian Government Bonds are once again trading mixed with Chinese government bonds dealing slightly cheaper across most benchmarks versus solid gains for South Korean sovereigns.

• China government bonds are dealing 0.5bp richer (2-year) to 1bp cheaper (30-year) after mixed May Trade figures.
• Export growth improved more than forecast, printing at +7.6% y/y, versus +5.7% forecast and +1.5% in April. Imports were weaker than forecast though at +1.8%y/y, versus +4.3% forecast and +8.4% in April. This aided a better-than-expected trade surplus of $82.62bn ($72.15bn was the forecast).
• Looking forward, trade tensions are likely to remain in focus (with both the US and EU) as we get closer to the US November election. China's trade surplus with the US rose to $30.8bn, but remain below 2023 highs.
• In contrast, the South Korean sovereign bond curve is richer, with benchmark yields ~4-5bps richer. Following yesterday's local market closure and a light domestic calendar today, the rally should be seen as a catch-up to recent favourable global bond developments.
• The South Korean data calendar is relatively quiet over the coming week, with April goods balance/current account figures, along with the May unemployment rate due next Tuesday. Then on Friday we have May trade price figures.