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Bond Market Insights - Mon, 30 Jan 2023

Asia IG and Australia CDS markets open unchanged with sentiments turning soft for most of last Friday. Cash bond markets start 1-2bp tighter due to lack of supply. Chinese accounts are back from Lunar New Year break. Today we are grinding tighter due to a lack of supply, momentum remains strong. China HY property is up as much as 2 points, despite their stocks having been hit 3-6% today.

China HY prices have climbed 12 consecutive week according to Bloomberg Asia Ex-Japan USD Credit China HY. The average level of China’s developer-dominated market has rocketed from a record low of 49.3 on Nov. 3 to 78.7 cents as of Friday, the highest in a year. It will be interesting to see the impact when global funds

All eyes are on Adani equity prices, after the release of the group’s rebuttal overnight. Indian banks have corrected 6% since the release of a recent third-party report on the Adani Group, on concerns of exposure to the group entities. ADANIG 4.375% 24 slid to new lows today, reaching 72.50/74.50.

In the US the focus is the FOMC meeting on Feb 2. Market expectations have been reduced to a 25bps hike. ECB and BoE meetings are also on the agenda in this week.

The US debt ceiling is another concern. House Speaker McCarthy and President Biden agreed to meet at the White House on Wednesday. McCarthy said Republicans will not allow a U.S. default and that cuts to Social Security and Medicare would be off the table in any negotiations

ECB and BoE meetings will also be in this week.

The China consumer sector rebounded over the CNY holiday. According to PRC Department of Commerce retail sales from a sample of corporates increased 6.8 YoY. Food was up 9%, cloth 6% and automobiles 3.6%. Online retail sales were up 14.5% YoY.


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