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Strong Bids At Auction For Indonesia

  • INDIA: Yields lower in early trade. Bonds spent the session treading water on Monday, markets shaking off the weak auction from Friday and choosing to focus instead on rising GST collections and a pickup in PMI figures. Markit India manufacturing PMI rose to 55.3 in July, up from 48.1 in June, helped by lower coronavirus case numbers. Elsewhere there were reports that India's plan to sell two state-controlled lenders could be deferred to next financial year, the government is yet to seek parliament's approval for law changes needed for the sale to go ahead. Markets await services PMI data tomorrow but focus remains on the RBI rate announcement later in the week. Bond traders will also watch today's INR 125bn state debt sale.
  • SOUTH KOREA: Futures are higher, jumping after a sharp decline into the close on Monday. Data earlier showed CPI rose above estimates, Core CPI rose 1.7% Y/Y, above the 1.5% estimates while headline CPI rose 2.6% against a 2.4% consensus. Inflation above the Bank of Korea's 2% target for the third month in a row, but this expected to have little effect on short end bonds with the rate hike already priced in. Markets will look to the BoK minutes later in the session for any clues as to how the fourth wave of coronavirus has affected the outlook and opinions of BoK members.
  • CHINA: After hitting fresh contract highs yesterday futures are lower today, yields also higher after declines in Monday's session. The 10-Year yield fell to 2.8% on Monday, the lowest in over 12 months, as concerns over coronavirus cases combined with expectations of further easing measures from China. Bonds have gained for seven weeks in a row, the longest since the start of the US-China trade war in 2018. Meanwhile repo rates are slightly higher but within yesterday's ranges. The overnight repo rate is at 1.8167% while the 7-day repo rate is at 1.90%. The PBOC injected CNY 10bn, matching maturities with injections.
  • INDONESIA: Yields mostly higher but off session highs after strong bids at the bond sale. There were said to be bids for IDR 107.8tn against a target of IDR 22tn at the sale of 2032, 2036, 2042 and 2051 paper. Elsewhere, Indonesia extended its emergency curbs on mobility through Aug 9, with the strictest rules set to be left in place in major Javanese cities, including Jakarta. Min Luhut Panjaitan who coordinates emergency Covid-19 measures said that "confirmed cases, positivity rate and deaths are still high in areas such as Bali, Malang, Yogyakarta and Solo," but also noted that restrictions would be relaxed gradually by the end of the month.

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