Upward Impetus

Most bonds higher on upward impetus from US Tsys, some caution in domestic markets and local incentives also supporting the space.

• INDIA: Markets in India are closed for a local holiday.
• SOUTH KOREA: Futures opened higher, pushed upwards by the move in US T-notes, in the cash space yields are lower, flattening on the curve seen, 2-/20-year yield 1.5bps tighter. Some caution over COVID-19 infections. South Korea reported 731 daily new coronavirus cases in the past 24 hours, rebounding to over 700, the most in over three months. Strong unemployment data kept a lid on bonds.
• CHINA: Repo rates climbed for a third day, on track for the longest run of increases since February, demand for liquidity is on the rise with lenders helping corporates pay tax. Bonds marginally higher, up for the fifth straight session but stalling around these levels, in the cash space yields hover near the lowest since January. The MOF sold 2-,5-year debt to similar demand to previous auctions. There is some speculation that the state linked sector is close to seeing its first defaults on public bonds, doubts over bad-debt manager Huarong's future continues to cause consternation for credit markets.
• INDONESIA: Yields lower for the first time in three days following a successful auction yesterday. The government sold IDR 21.68tn, the most debt in two months, compared to just IDR 3.75tn at the last sale. There was some concern over demand, with bid/cover at 1.86. Also boosting demand today are reports that Indonesia will offer a record-low tax on interest earned from holding bonds cutting the final income tax to 10%, starting in August, from the current 20%.