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South Korea Yields Hit Multi-Year Highs After CPI Overshoot

ASIA RATES
  • INDIA: Yields lower in early trade. Markets look ahead to an INR 360bn state debt sale and sovereign bill sales today for clues as to demand at sovereign auctions later this week, the RBI monpol meeting will begin today which could keep some participants on the sidelines.
  • SOUTH KOREA: 10-Year yield hitting the highest level since November and close to hitting the highest since 2018 at 2.203% as inflation rises at the fastest pace in nine years at 2.6%, sparking speculation that the BoK will be forced to raise rates to reign in prices. Also weighing on bonds are reports from earlier this week that the DPP will seek additional fiscal measures, including another budget, this year.
  • CHINA: Repo rates declined with the 7-day repo rate dropping back below 2.20%. Futures initially opened lower but regained ground to trade around neutral levels. MOF sold 3- & 7-year upsized bonds. US Tsy Sec Yellen held an introductory virtual meeting with the Vice Premier Liu He and said talks were constructive.
  • INDONESIA: Curve twist steepens. CPI rose above estimates at 0.32% Y/Y while core CPI rose 1.37%, also beating estimates. Manufacturing PMI rose to 55.3 in May from 54.6. Markets look ahead to today's dollar-denominated sukuk bond sale, overseas investors returned to be net buyers of Indonesian debt in April and May.

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