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Bond Market Insights - Tues, 22 Nov 22

China property was down -1 to -3pts, sellers continuing to dominate the market. Some distressed names were in demand, EVERRE, SUNAC and KAISAG particularly. There was private bank support for higher quality names such as Roadking and Greenland. Macau gaming slipped 1-2pts while China HY industrial names were unchanged and Fosun saw demand from both private banks and funds.

Rising covid cases and the re-emergence of lockdowns, specifically in the city of Shijiazhuang which was a test case for more relaxed measures including a pause in routine mass testing, put pressure on China IG. SOE perps and AT1 however are being supported by onshore demand despite the expensive valuation currently.

US Treasuries were buoyed by a 6.2% drop in oil prices to $75.08, a level not seen since January. As 10yr rallied the front end lagged due to the dual auctions of 2yr and 5yr notes. 2s10s inverted further, to below -75bps, a level not seen since the Volcker era in the early 1980s.

Overall, volumes are light ahead of Thursday’s holidays. The week ahead does not bring much in terms of data, but FedSpeak abounds, with Bullard, Cleveland Fed President Mester, and Kansas City Fed President George heading to the podium tonight.

In Australia there is a new 3yr MTN for Great Southern Bank, a business name of Credit Union Australia Ltd (CUA) rated Baa1 (Stable) by Moody’s and BBB (Positive) by S&P. The notes are expected to be RBA repo-eligible.

Asia is opening broadly unchanged today. Private Banks continue to be net buyers of higher yielding names. Korea high quality grinding tighter on RM buying and China core SOE names are still stable while there is some weakness in TMT and high beta SOE such as HAOHUA.


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