Asia Sovereign’s were dominated by the frontier markets. Pakistan and Sri Lanka were marked down as political uncertainty escalated. Pakistan cancelled a no confidence vote that was scheduled for Sunday, while in Sri Lanka, following protests and a declaration of emergency, the entire cabinet and the central bank governor resigned, leaving the Prime Minister and President on the podium. PKSTAN was marked around 2 points, SRILAN shifted 5 points where there was some buying, helping the market rebound. Mongolia remained stable.
IG Sovereign’s prices were mostly unchanged with some gains shown in the short end, driven by local buying. Sovereign Wealth Funds were seen selling the long end of INDON and PHILIP. India IG was 5bps tighter, with liquidity in the 10yr sector, India HY languished as the recent supply brought out sellers, particularly of renewables, which were 0.50 lower. China IG was slow but positive, tightening 3-5bps.
There has been quite some compression in this recent rally and second tier leasing paper, a laggard, has caught up and the spread between perps and bullets has become negligible.
HK will be out for a holiday today, which could keep activity light but expect choppy markets to persist.