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Bond Market Insights - Fri, 11 Nov 2022

Asia EM IG Sovereign bonds gapped higher today, between 1.50 to 4.50 points and spreads to US Treasuries were 15bps to 40bps tighter. The overnight US figures and positive headlines from China reinforced the risk-on tone in the market. Actual trades remain few with a lot of price discovery taking place specially in the off the runs as players try to reprice the various curves. The market dropped from its highs after some rebalancing and as UST futures showed signs of giving up some overnight gains.

Quasi's are also seeing better buying, which is to be expected as players search for laggards but offer side liquidity remains scant. Frontiers are also firmer but given the wide bid-offer, getting anything meaningfully done has proven a bit inefficient. The US holiday today not helping with the liquidity as well without live USTs to price on.

Frontiers were dragged up aswell. Sri Lanka is pushing into the mid-20's, up 1pt. Pakistan was 3 points higher. Mongolia also saw some buying of the long end, all though the retreating local bid after the recent squeeze in the short end kept that part of the curve offered.

China financials traded higher on the back of both global and local positive news,, lagging the TMT/ AMC sectors. Leasing and non-bank names were 5-10bps tighter and there was Private Banking demand for quality leasing and bank T2 bonds.. Real money demand was still light. BOCAVI tried to push higher,, but was anchored by the heavy 2024 and 2025 ,maturities.. AT1's were very strong, brushing off the recent perp debacle.. Core names traded 0.25-1pt higher. Short covering and real money buying continued, while supply is very limited. Private banking and asset manager demand for peripheral names pushed Citic, Bank of East Asia and Chong Hin Bank another 1pt higher.

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