RBI Committed To GSAP, Bond Markets Unphased

Indonesian bonds buck the regional trend selling off ahead of an auction later, while COVID-19 concerns remain a concern in India. Declines in equity markets support bonds in China and South Korea.

• INDIA: Bonds under pressure in early trade. The RBI released its monthly bulletin yesterday and defended its bond purchase programme, saying the benefits outweigh the risks. The bulletin added "Policymakers know from painful experience it is perilous to withdraw stimulus too soon" and that the RBI could tolerate an overshoot in inflation to safeguard the recovery.
• SOUTH KOREA: Futures higher in South Korea, gaining through the session. Data released earlier showed preliminary Q1 GDP above estimates. Q/Q printing 1.6% vs estimates of 1.1%, Y/Y growth at 1.8% vs estimates of 1.2%. Exports, consumption and investment all helped lift the figure. The 20-Year auction was well received, bid/cover rose from the previous auction, the MOF sold above the planned amount.
• CHINA: The PBOC matched maturities with injections for the thirty sixth straight session, the last time the bank injected funds into the financial system was Feb 25. The overnight repo rate down 21bps to 1.7891%, the 7-day repo rate up 23bps at 2.28%, above the prevailing 2.20% rate. Futures are slightly higher in China as equity markets decline. Elsewhere Fitch downgraded China's Huarong's credit rating to BBB from A, warning of potential further downgrades if the Chinese government withholds indications of support.
• INDONESIA: Bonds sell off in Indonesia, yields higher across the curve with bear flattening seen. Health Min Sadikin announced that Indonesia will introduce tighter border measures in anticipation of the return of its migrant workers from abroad. Migrants typically return home for the Eid al-Fitr holidays in May. The government will target IDR 30tn at auction today, there is a one month gap until the next auction, which is expected to help participation today.