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Bond Market Insights - Wed, 08 Nov 2023

Overnight 10yr treasuries ground higher while the short end was anchored by the $48bn 3yr note auction. The curve has provided some concession throughout the week with 3yrs cheapening on the fly, and outright the area has sold off 10-15bp since the highs on NFP. The 3yr auction came about 0.5bp through the market with dealers taking down the lowest percentage for a few months. The decent results appeared to inspire some confidence that the 10yr & 30yr auctions will see adequate demand. Powell speaks later but will probably not stray far from his post FOMC rhetoric.


The Corporate calendar cooled down, just 7 deals totalling a little over $6bn from around $24bn on Monday. Charter Communications (Ba1/BBB-) and VW (A3/BBB+) were the main issuers. Secondary markets were soft for choice, widening a couple of bps. From Asia’s perspective the Indonesian Green Sukuk came in line with expectations and is opening tad higher this morning in line with UST’s. The $500mm Fukoku Mutual Life came at 6.8%, 40bps inside IPT, with an order book of $4.5bn. It kicked off at 100.30/ 100.50 when it was free to trade this morning, quickly running into flippers.


The new KOROIL 3yr failed to attract demand as interest is drifting to longer tenors following Powell the Doves comments. Demand emerged for 5yr Korean paper in secondary.


Yesterday EM Sovereigns widened slightly after Monday’s LATAM supply and some ETF selling, initially holding in well, but the announcement of the new Indonesia sukuk gave the secondary market a jolt, INDOIS 32 sukuk widening 13bps. Philippines widened 3-5bps in sympathy, trading 3-5bps wider.

China HY was strong, with Vanke Real Estate (VNKRLE) +3-5pt following a shareholder's plan to inject capital and buy bonds. Other publicly owned enterprises were up +1-5pt. Macau gaming saw profit taking, down as much as 1pt.

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