Richer Following Mixed Results For China’s PMIs & Weak South Korean IP

Asian Government Bonds are richer today after yesterday’s heavy session.

• China Government Bonds are dealing flat to 4bps richer, with a steepening bias, after today’s official PMI data.
• Manufacturing stayed in expansion territory in April, printing at 50.4 (50.3 was forecast and 50.8 was the prior outcome). Non-manufacturing or services stayed in expansion territory at 51.2, but this was comfortably below market expectations (52.3 and the prior outcome of 53.0). The composite index is back to 51.7 from 52.7 in March.
• The local data calendar is quiet until next week when onshore markets return (closed from Wed-Fri this week).
• Elsewhere, the IMF sees Asia Pacific contributing around 60% to global growth in 2024. It revised up 2024 growth 0.3pp to 4.5% for the region in its economic outlook but still down from 2023’s 5.0%. The upgrade was driven by China, India and Australia.
• South Korean Sovereign Bonds are 3-6bps richer across maturities after March industrial production printed well below expectations at -3.2% m/m versus +0.5% est. In y/y terms, IP growth was +0.7% (+4.6% forecast). This puts IP momentum back to Q3 2023 levels.
• The result places downside risks to the bumper Q1 GDP result (initially reported as a 1.3% q/q rise). Overall manufacturing activity fell in quarter, but the GDP report suggested it rose 1.2%.