Taiwan Bond Yield Falls to Nine-Month Low as Treasuries Advance

Taiwan’s 10-year bonds rose, pushing the yield to a nine-month low, as speculation the European Central Bank will ease monetary policy spurred gains in Asian debt markets.

Ten-year U.S. Treasury yields dropped to a six-month low yesterday after ECB Executive Board member Peter Praet told Germany’s Die Zeit newspaper the central bank is preparing a range of measures to boost economic growth. Taiwan sold two-year certificates of deposit at a record-low yield of 0.694 percent on May 9, suggesting surplus cash in the banking system.

“If Treasury yields fall further, Taiwan’s bond yields may follow,” said Cindy Lee, a Taipei-based fixed-income trader at Capital Securities Corp. “The local economy isn’t too strong and funding is very abundant.”

The yield on the 1.5 percent sovereign notes due March 2024 fell three basis points, or 0.03 percentage point, to 1.4928 percent as of 10:35 a.m. in Taipei, prices from GreTai Securities Market show. That’s the lowest level for benchmark 10-year securities since August.

The island’s dollar appreciated 0.2 percent to NT$30.160 against its U.S. counterpart, according to prices from Taipei Forex Inc. One-month non-deliverable forwards were little changed at NT$30.115.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, climbed two basis points to 3.2 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Justina Lee in Taipei at jlee1489@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Amit Prakash

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