HALISTER1: INSIDE TAIWAN: Govt Bonds Fall as Risk Aversion Eases, TWD Gains

INSIDE TAIWAN: Govt Bonds Fall as Risk Aversion Eases, TWD Gains

(Bloomberg) -- Yield of Taiwan govt bonds advance as risk aversion from U.K.’s referendum eases slightly ahead of the weekend; TWD gains, supported by foreign fund inflows.
  • Yield of 10-yr Taiwan govt bond rises 1.66 bp today to close at 0.7866%, highest since June 8
  • Local bond yield bounces back, following U.S. Treasury yield recovery, as chances for U.K. to leave EU declines after the murder of pro-remain U.K. lawmaker ahead of Brexit referendum, says Kevin Chan, fixed income trader at SinonPac Securities
    • Still positive on bonds as upside for yield is capped with delayed Fed hike
    • Expects yield of 10-yr note to trade within 0.77% to 0.81% before Brexit vote on June 23; yield of 5-yr to fluctuate within 0.53% to 0.57%
  • Yield on 5-yr govt bond rises 0.8 bp to close at 0.5410% on when-issued trading
  • TWD rises 0.02% to close at 32.385 vs dollar, also the strongest closing price since June 8
  • TWD supported by equity inflows in June, but continue to see USD/TWD upside, say Standard Chartered senior economist Tony Phoon and Asia FX strategist Eddie Cheung in a note today
    • CBC to lower benchmark rediscount rate by 12.5bps to 1.375% on 30 June; to be tolerant of TWD weakness as local fundamental disappointing
    • Seasonal dividend repatriation in August to support USD/TWD; maintains USD/TWD yr-end target at 33
  • Overseas investors net buy NT$5.89b ($181.82m) local stocks today
  • USD/TWD forwards second-most active on DTCC
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Eddie Cheung (Standard Chartered PLC)
Kevin Chan (SinoPac Securities Corp)
Phoo Meng (Standard Chartered PLC)

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