Reflation Trade Keeps Pressure On Bonds

The reflation trade continues as bonds continue to sell off, yields in the US hit the highest levels in a year. A pause in the equity rally amid broad risk aversion wasn't enough to put a bid into fixed income in the region.

• INDIA: Short end saw buying ahead of slated 3-, 6-, 12-month bill auctions. Yields are higher along the rest of the curve. Meanwhile the RBI confirmed. The RBI have confirmed it will conduct simultaneous purchase and sale of government securities, another operation twist, under the banner of OMOs on Feb 25.
• SOUTH KOREA: Futures gapped sharply lower on the open, but have regained some poise as the session wears on. South Korea's finance minister said Tuesday the government is seeking to submit an extra budget bill in early March in a bid to provide targeted support to merchants and businesses hit hard by the pandemic. There is still no indication of increased issuance size to finance the extra budget bill.
• INDONESIA: Bonds fell across the curve in Indonesia after the government sold IDR 30tn against a target of IDR 35tn. Market participants await the BI rate announcement tomorrow where the consensus is for a 25bps rate cut.