SINGAPORE, July 9 (IFR) - Buying interest is picking up momentum to such an extent that even bonds that had been lagging in recent trading sessions have started to find bids.
Traders in Singapore said they saw better buying across the board today as investors started to feel that Treasury yields might have reached a plateau and found a new trading range. “Accounts seem to be getting comfortable about owning risk at the current absolute yields,” said one trader in Singapore.
Buying interest remained mostly focused on high-quality more liquid bonds, such as those from Chinese state-owned oil and gas companies, which ended the session 10bp tighter on average.
Other better-rated bonds were also in demand and KDB’s 2022s closed the session quoted at 132bp, 10bp tighter than where they had closed yesterday.
Traders also saw some nibbling at the less-liquid and lower-quality Single A names and the 2018s of Daegu Bank and Vanke were finishing the session 10bp tighter quoted at 205bp and 220bp, respectively, mid-market.
Still, sovereign bonds did not see much action and were moving in tandem with Treasuries. Spreads for the most traded names were mostly unchanged as was the Asia iTraxx IG index, last quoted at 155bp.
High-yield found subdued interest, as well. Private-banking accounts were picking up some of the shorter-dated bonds, such as Evergrande 2015s, which ended the session quoted at 102.00/103.00, USD1.5 stronger than where they were last week.
In spite of the upbeat mood, desks were cautious. One trader said that actual trading was very thin and that less than USD2m had crossed his desk the whole day. “It is only coming in drips and drabs,” said an analyst in Singapore.
Given the illiquidity, desks remained defensive. “It only takes one big account to start selling and the whole thing will collapse,” said one trader.