Taiwan’s Bonds Rise on Concern Over Strength of U.S. Recovery

Taiwan’s government bonds gained, with benchmark five-year yields at a one-week low, as regional stock markets dropped on concern about the strength of the U.S. economic recovery. The island’s dollar rose.

Federal Reserve Chairman Ben S. Bernanke said unemployment is still too high and policy makers don’t rule out any further options to boost growth. The U.S. Conference Board reported yesterday that an index of consumer confidence was at 70.2 this month, near the 71.6 reading in February, which was the highest in a year. Global funds sold $243 million more Taiwanese shares than they bought in the first two days of this week, cutting net purchases this year to $4.9 billion, according to exchange data.

“Investors are still concerned about the strength of the U.S. recovery,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co. “Sentiment is a bit risk-off today, especially as the end of the quarter is approaching.”

The yield on the 1 percent notes due January 2017 fell one basis point to 0.992 percent at the close, according to Gretai Securities Market. That’s the lowest rate for benchmark five- year bonds since March 19.

Taiwan’s dollar gained 0.1 percent to NT$29.57 against its U.S. counterpart, according to Taipei Forex Inc. The currency has appreciated 2.4 percent this quarter.

One-month implied volatility, a measure of exchange-rate swings that traders use to price options, dropped 14 basis points, or 0.14 percentage point, to 4.05 percent.

The overnight money-market rate was little changed at 0.402 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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