SINGAPORE, May 27 (IFR) - Asian credit markets were closing
the day tighter as dealers and hedge funds bid up prices in a
bid to log in some gains before the summer doldrums bring
trading to a halt.
"There was buying across the board this morning, but it was
mostly dealers and hedge funds trying to catch the momentum,"
said a trader in Singapore.
Another trader said that real money was also getting
involved, though, as funds tried to square up positions that
they could retain for the summer. He expects a lot of position
jockeying until the meeting of the European Central Bank and US
non-farm payrolls for May next week.
"Memorial Day in the US yesterday already marked the
beginning of the holiday season there and, with the World Cup
coming in early June, the attention of European and Asian
investors will be diverted. So, no one expects much trading in
the second half of June and in July," he said.
As a result, he said: "Funds are trying to find positions
that they can square off for the next couple of months, they do
not want to be too long or too short anything."
Amid expectations that the ECB could announce additional
monetary stimulus next week, the other trader said he saw a lot
of buying in the morning as fast money tried to take advantage
of the positioning of real money.
That pushed up the more depressed recent issues, with the
5-year and the 10-year bonds of Cinda Asset Management
tightening 10bp in the morning.
Other bonds from Chinese state-owned entities tightened as
much as 5bp. High-yield bonds rose 25-50 cents across the board
on the back of the same movement.
Fast money, however, was already taking profit and some of
the best performers of the day gave back some of the gains
towards the end of the session. The more liquid 10-year bonds of
Chinese state-owned entities, for instance, were ending the day
only 2bp to 3bp tighter.
The Asia ex-Japan iTraxx IG index was also quoted only 1.5bp
tighter at the end of the Asian, having been more than 2bp
tighter earlier in the day.