Taiwan 10-Year Bond Yields Near 20-Month Low Ahead of Greek Vote

Taiwan’s 10-year government bond yields were near a 20-month low ahead of this weekend’s Greek elections that may determine whether the country will stay in the euro. The local dollar was little changed.

The yield on the 1.25 percent notes due March 2022 was at 1.186 percent in Taipei, compared with 1.180 percent yesterday, according to Gretai Securities Market. Benchmark rates reached 1.173 percent on June 8, the lowest level since October 2010, data compiled by Bloomberg show.

“Traders are trying not to amass large positions as all eyes are on the Greek election,” said Albert Lee, a Taipei- based fixed-income trader at Cathay United Bank Co. “Yields are going to stay at a relatively low level.”

ING Financial Markets cut its year-end forecast for the yield to 1.18 percent from 1.28 percent yesterday, citing a slowing economy and “mildly deflationary” pressure. A government report on June 20 may show the island’s export orders fell for a third month in May, according to the median estimate of economists in a Bloomberg survey.

Global funds sold $457 million more local stocks than they bought this month, exchange data show.

Greece will vote June 17 on whether to back the Syriza party, led by Alexis Tsipras, who wants to renegotiate bailout terms.

Taiwan’s dollar traded at NT$29.98 against its U.S. counterpart, compared with NT$29.991 yesterday, according to Taipei Forex Inc. One-month implied volatility, a measure of exchange-rate swings used to price options, rose 10 basis points to 5.51 percent.

The overnight interbank lending rate was steady at 0.511 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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