Slightly Mixed After China’s LPR Is Left Unchanged

Asian Government Bonds are slightly mixed in today’s session.

• China’s government bond curve is displaying a modest twist-flattening, with yield movements bounded by +/- 1bp, after the Loan Prime Rate, based on the People’s Bank of China’s medium-term lending facility (MLF) rate, remained at 3.45% for the one-year maturity and 3.95% for over-five-year tenor on Thursday.
• (MNI) China's LPR will likely fall in the coming months as lenders’ funding costs decline due to lower deposit interest rates and as regulators crack down on extra interest payments to depositors, while the central bank looks to downgrade the role of its medium-term lending facility. (See link)
• South Korean sovereign bonds are generally cheaper across benchmarks following a strong performance in June. While the 10-year yield is 2bps higher today, it remains approximately 30bps lower since late May.
• A committee of South Korea’s ruling party will meet with BoK and Financial Services Commission officials on June 27 to discuss interest rate issues, including potential rate cuts and reducing the interest rate burden for citizens.
• Some ruling party officials are advocating for a rate cut, but BoK Governor Rhee Chang-yong has emphasised the independence of the monetary policy board's decisions.