MNI China Daily Summary: Thursday, December 12

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Yields Creep Higher

ASIA RATES
  • INDIA: Yields higher in early trade. Yields rose and the rupee fell yesterday as dollar demand triggered outflows, the move was blamed on outflows of nearly $1 billion across corporates and exacerbated by backlogs due to the closure of US markets on Monday. Indian state governments sold INR 144.8b of bonds, less than the INR 147.3b planned. Indian assets could come under further pressure today thanks to a move higher in US yields. Participants look ahead to an INR 170bn bill sale today. Looking further ahead the RBI will conduct a bond auction tomorrow, while the highlights of the economic docket next week include industrial production, CPI and trade data.
  • SOUTH KOREA: Futures in South Korea are lower, tracking a move in US tsys. In the cash space the curve twist steepened, 10-Year yield rose 0.9bps to 1.993%. Late yesterday there were some comments from FinMin Hong, he said that it is likely there will be more BoK interest rate hikes ahead, while coronavirus cases jumped back above 2,000. The BoK sold KRW 1.1tn of 1-Year MSB's, the sale was soft with cover of 1.04 and an average yield of 1.08%. Elsewhere data showed bank lending to households rose to KRW 1,046.3tn from KRW 1,040.2tn in July.
  • CHINA: The PBOC matched maturities with injections today, repo rates rose with the overnight rate 18.9bps higher at 2.189% after dropping into yesterday's close while the 7-day repo rate is above the PBOC's prevailing level at 2.2016%, 5.16bps higher. Futures are slightly lower, but have come off worst levels seen slightly after the open, recovering as stocks come under pressure. As a reminder head of the PBOC's monetary policy department said yesterday China's market liquidity will remain basically balanced and it won't have big gap or large fluctuations in the coming months, while PBOC Deputy Governor Pan said China will stick to prudent monetary policy, won't impose flood-style stimulus measures and there's ample room for policy makers.
  • INDONESIA: Yields higher, curve bear flattens. Danareksa Consumer Confidence rebounded to 71.2 in August from 62.1 recorded in July while Bank Indonesia's consumer sentiment gauge slipped to 77.3 from 80.2. Finance Ministry sold IDR 10t rupiah of Islamic bonds and T-bills on Tuesday, meeting its target, bid/cover came in at 5.6. Elsewhere there were reports that the government issued emergency use approval for vaccines made by CanSino Biologics and Johnson & Johnson.
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