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SINGAPORE, June 2 (IFR) - Secondary trading in Asia was muted today as Hong Kong desks were closed for the Dragon Boat Festival holiday.
Yet, Singapore traders were readying themselves for two big events coming up this week - the European Central Bank rates decision on Thursday and US non-farm payroll numbers the following day.
A Reuters poll with 48 economists conducted on May 28 indicated median expectations that the ECB will cut its refinancing rate to 0.10% from 0.25% to boost lending.
"This week is going to be event-driven and we are positioned to not take views," one Singapore-based trader said.
Sovereign names came off the highs seen last week as market players expect the rally in US Treasury to soften this week. Indonesia's 2044s were quoted at 117.875/118.375, down from the 118.75 historical high recorded last Thursday, the trader said. The Philippine paper was also down 0.125 point across the curve.
The Asia ex-Japan IG iTraxx index was flat at around 107, close to the tightest level in nearly a year.
Chinese credits are expected to stay firm on the back of better-than-expected official May China PMI number that rose to a five-month high of 50.8 from April's 50.4.
Chinese property names are also likely to be supported by a selective cut in the required reserve ratio over the weekend. The cut, while only applicable to rural banks, has been seen by the market as an indication that wider monetary loosening may be on the horizon.
But much of the positivity may have been built in already as property paper rallied last week. "Also, more developers may take advantage of this window to issue bonds, which could be negative for the secondary market," said another Singapore-based trader.