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US TREASURIES (USS) RALLIED at the Start of the Month, with the SurgeBangalore Investment
Primarily Driven by Major Central Banks’ Statements. The Rally Was Reversed
Follow the release of Steady us information
About a portential upward adjustment to the dot plot. Eventually, feedral
Reserve (fed) Office of Office
Three Rate Cuts in 2024. At the end of march, The Benchmark 2-and 10-Year
USELDS SETTLED AT 4.62% and 4.20%, Respectively, 0.1 Basis Points (BPS)
Higher and 5.0 BPS LOWER Compared to the End of FeBruary.
We Maintain a Positive Outlook for Asian Local Government Bonds,
Particularly Those from India, Indonesia and the Philippines. In our view, the theySimla Stock
disinFlation Trends in the Country Should Provideo Their Central Banks with
The Flexibility to Shift Towards Rate Cuts Later in The Year.
Backdrop of a Slow But Steady Easing of Monetary Policy, Coupled with
Reasonable Growth, to be positive for the bonds of the countries.
Asian Credits Registered Total Returns of +1.06% in March as Credit Spreads
tightned 9 BPS. Asian Investment-Grade (IG) Credit Slightly
UnderPerformed its asian high-yield (hy) counterpart, RISING 0.94% as AS
Spreads Narrowed 4.6 BPS. Meanwhile, Asian Hy Credit Gaind 1.81% AS
Spreads Tightned 55 BPS.
From a technical pespective, We Expect Asia Credit to Remain Well-SUPPON
cheaper onShore funing. Although Fund Flows Into Emerging Market Hard
Currency Funds Have Remained Weak, Demand Remains Robust from Regional
Instificational Investors Looking to Lock in Attractive Yields.
Certain Negative Risk Factors May EXERT SOMENING PRESSURE Asia Credit
spreads, particularly in the ig segment.
Market Review
The fed holds to forecast of three raters cuts in 2024
USTS RALLIED at the Start of the Month, With the Surge Primarily Driven By Major Center Banks. Despite their Cautius ApproACH to accept Easures, The Central Banks Confirmed that Easing Would Be Implemented this year.In Yields. Although us Labour Data Mostly Exceeed Expectations, Investors Interpreted Softer Growth and A Higher UNEMPLOYMENT RAGNS OF A Al softening in the jobs market.
The rally by exams the start of March Completely Revery Follow. Revision to the Dot Plot at the Federal Open Market Committee Meeting. USST YIELDS PACLED BACK SLIGHTLY AFTER the Fed MaintainEdRelately Dovish Stance. Despite Improvements to their Growth and Inflation Projects, The Latest Dot Plot Showed Policy Makers Story Anticipating Three Rat E cuts by the end of 2024.
The Bank of Japan (BOJ) TOOK A Notable Turn Away From Negative Rates in March, Implementing Its First Rate Hike in 17 Years. It Also Ended Curve Control Cy, Which Involved Purchasing Japanese Government Bonds to Manage Interest Rates. The japanese yenShowed A Brief Initial Response But the Markets Mostly Shrugged Off the Boj’s DECISION. USST YIELDS SUBSEQUENTLY Il the end of the month. At the end of March, The Benchmark 2-Year and 10-Year USELDS SETTLED AT4.62% and 4.20%, Respectively, 0.1 BPS Higher and 5 BPS LOWER Compared to the End of February.
Chart 1: Markit IBOLAN LOCAL BOND Index (Albi) (albi)
For the Month ending 31 March 2024
For the year ending 31 march 2024
Central Banks in Malaysia and Indonesia Leave Policy Rates Unchanged
BANK Negara Malaysia Maintaine was overnight Policy Rate AT 3.00%, indicating that ites monetary painting constinues to support the eConomy. The Central Bank Allso TED that the Malaysian Ringgit is undervalued, considering the country’s Robust Economic Fundamentals and Growth Outlook. FURTHERMOREits collaboration with the government in implementing coordinated measures, which are “contributing to greater inflows, lending support to a firmer ringgit”. Meanwhile, Bank Indonesia held policy steady at its March meeting, focusing on stabilising the rupiah and controlling inflation. However, itHinted at Potential Rate Cuts in the Second Half of the year. In the Meantime, The Central Bank Plans to Expand Liquidity Incentives to Bank that High Borro Wing Costs Do Not Stify Credit Availability and Economic Growth.
Headline Inflation Rates Accelerate in February
The Month of February Witnessed A Rise in Headline Inflation Rates Across the Region. Singapore’s Consumer Price INDEX (CPI) 3.4% Year-On-Year (Yoy), Yoy (Yoy) Exceeeding January’s 2.9% Increase and Consensus Estimates of a 3.2% Rise. Policymakers AttributeThe increase to an acceleration in accommodation inflation and highher core priors. AdDitionally, Higher Services and Food Inflace, PARTIALLY Resulting FROM Effects associated with lunar new year, Contributed to the Rise in Core Inflation.
In Malaysia, Headline Inflace Edged up to 1.8% yoy in February, Driven in part by the increase in domestic water, % from january. Indonesia’s Headline Inflation Rose to 2.75% Yoy in February, up from 2.57% in January, Driven by Higher Food and Transport Inflation, Even Thought Core Inflation Remature Unchanged AT 1.68% Yoy.
In the Philippines, The Headline CPI Rose to A Higher-Than-EXPECTD 3.4% yoy in February, up from 2.8% in january, propelled by a surge and non-alcohol IC Beverages PriceS Along with Increased Transport Inflation, While Core Inflation Slowedto 3.6% from 3.8% over the ame person.
Thailand ’s Headline CPI DECLINED 0.77% yoy in February, Falling for the Fift Consecutive Month. AILAND MODTERATED to 0.43% Yoy in February from 0.52% in January.
China Unveils A 2024 Growth Target of "About 5%"
Early In March, Chinese Premier Li Qiang Presented His First Government Work Report at the Annual National People’s Congress. "About 5%", with the Official Fiscal Deficit Maintaine 3% of GDP. An EstimateOf Last Year’s FISCAL Deficit, Which Includes Off-Balance Sheet Items, WAS LOWER than Roughly 7%. However’s Budget Points TO A LAR GER DEFICIT of 8.2% If Fully Executed. A Notable Anncement for Long-Term Growth and StimulusWAS The Plan to Issue "Ultra-LONG" (30-to 50 – year) Special Sovereign Bonds Over The Next Few Years. E Previous Year at "Art 3%". Additionally, MonetaryPolicy is extended to remain accommodative, Described as "Flexible, APPROPRIATE and Precise".
Market Outlook
Remain positive on india, Indonesia and Philippine Bonds
We Maintain a Positive Outlook for Asian Local Government Bonds. The Anticipated Decrease In Developed Bond Market Yields, As Major Center Banks, Including The FED , Pivot Towards Rate Cuts AMID EASINGIONARY PRESSURES, Coupled with Increased Foreign Inflows, is excavated to bolster demand forAsian bonds.
We exten the disinFlation Trend in India, Indonesia and the Philippines to Persist. In our view, this should provide the reserve of India, Bank Indonesia AN D Bangko SENTRAL NG Pilipinas The Flexibility to Shift Towards Rate Cuts Later in the year. A backdrop of ofSlow But Steady Easing of Monetary Policy, Coupled with Reasonable Growth, Should Be Positive for Local Currency Bonds in These Countries. Attractive Real Yields of These Bonds in Comparison to their Regional Peers Should Further Bolster Demand.
Market Review
Asian Credit Spreads Tighten FURTHER in March
Asian Credits Delivered Total Returns of 1.06% in March As Credit Spreads Tightned 9 BPS. Asian Ig Credit Slightly UnderForformed Asian Hy, With A Return of 0.94% as spreads narrowed 4.6 BPS. Asian Hy Credit Gained 1.81% as Spreads Tightned 55 BPS.
Asian Credit Spreads Widened in Early March, Partly Dragged by Weakness in the Chinese Section Section to Concerns About a Large Developer. D Later in the Month On Growing Indications that Banks Would Support the Developer. Notbly, The Lack of Significant MeasusesAt the National People’s Congress to Address Increasing Economic Headwinds Did Not Negatively Impact Chinese Credits. Strong Property Sales Following The Removal of All Property Cooling Measures.
Philippines Hy Credits Also Rallied as a Major Conglomerate Based in The Country Reported A Large Equity Investment and Annound Amps Perpetual Bond. ORTS of US Prosecutors Investigating India’s Adani Group for Potential Bribery Soured Sentiment Toward Indian Credits, Resulting in their UnderFormance. TheOverall Resiliation of Asian Credits was supported by Strong Technicals, as new support, Arch, Spreads for All Major Country Segments, Excluding Those of India, South Korea and Thailand, Had Tightened.
Primary Market Activity Picks Up in March
Activity in the Primary Market Picked Up Slightly in March. The Ig Space Saw 11 New Issues amount to USDOLLAR (USD) 5.5 Billion, Including A USD 1.4 BIL Lion Three-TRANCHE ISSUE from Korea National Oil Corp and A USD 1.0 Billion Issue From AIAGroup. Meanwhile, The Hy Space Saw Four New Isues Amount to USD 1.4 Billion.
Chart 2: JP Morgan Asia Credit Index (JACI)
Market Outlook
Supportive Asia Credit Fundamentals and Strong Technicals, But Tight Valuation Calls for CaTious Positioning
The functional backdrop for Asian Credit Remains Supportive. In China, The AFOREMENTINED AnNOUNCEENTS at the National PEOPLES SUGGEST that Policymak Ers are aware of the challenging environment. China’s Growth Target Still Ambitious, As the Property Security SECTINUES to Weighy Despite A Trecovery in the country’s purchasing managers’ index (PMI).
Meanwhile, MacroeConomic and Corporate Credit Fundamentals ASIA Ex-Chinese Are Expected to Stay Resilient with A Recovery in Exports Growth Potential OFF Setting Softer DomStic Conditions. Non-FinanCial Corporates May Experience A Slight Weakening in Both Leverage and Interest COVERAGE FROMMING FROM LOWER EARNINGS GR OwthAnd incrementally higher funding costs. However, we believe there is adequate ratings buffer for most, especially the Ig Corporates. ITH A Stable DEPOPOSIT BASE, Solid Capitalisation and Strong Pre-Provision Profitabilityahead.
From a technical pespective, we exten Asia Credit to Remain Well-SUPPORTED DUE to Subdued News Although Fund Flows Into Emerting Market Hard Currency Funds Have Remaind Weak, Demand Remains Strong from Regional Investors LookingTo Lock in Attractive Yields. However, following the sharP Rally in Recent Months, These Positive Factors have ben largely priced in. Negative Risk Factors Such as a Weaker-Than-EXPECTD GLOBAL ECONOMY, As Well as Local Political Uncertainties andGEOPOLICICAL TENSIONS, May Exrt Some Widing Pressure on Asia Credit Spreads, PARTICularly in the Ig Segment.
Guoabong Wealth Management
