South Korean Bonds Sharply Richer, China Bonds Little Changed

Asian Government Bonds are flat to sharply richer led by South Korea.

• The South Korean Sovereign Bond curve has bull-flattened, with yields 2-6bps lower.
• With today’s PMI data stronger, the move appears linked to recent global bond market developments. That said, weekend data on May trade figures showed weaker-than-expected trade figures. Export growth was +11.7%y/y versus +15.3% forecast, imports were -2.0% y/y, against a +2.7% forecast. The trade surplus was near $5bn, above expectations. The slightly weaker export backdrop owed to softness outside of the tech space.
• PMIs for North East Asia rose, with South Korea seeing the biggest improvement relative to the April outcome. South Korea's PMI rose to 51.6 (from 49.4 prior), which is back to around mid-2022 levels. Output surged to 53.3 from 50.1 in April, while new orders were also up versus the April print.
• Elsewhere, South Korea to suspend 2018 Military Agreement with North Korea: YONHAP – BBG.
• Tomorrow will see the May CPI data.
• In contrast, China Government Bonds are dealing little changed after China's Caixin manufacturing PMI registered 51.7 in May, up 0.3 points from April and the highest level since July 2022. The index has stayed in the expansionary zone above the breakeven 50 mark for a seventh month. (See MNI link)