Taiwan 10-Year Yields Advance to One-Week High on Recovery View

Taiwan’s government bonds fell, with benchmark 10-year yields rising to a one-week high, after a jump in export orders spurred optimism the island’s economy is starting to recover.

Orders for overseas sales advanced 3.2 percent in October from a year earlier, more than the 0.2 percent increase forecast in a Bloomberg survey, official data showed yesterday. Gross domestic product probably rose 1 percent in the third quarter, after declining 0.2 percent in the preceding three months, according to the median estimate in a Bloomberg survey before a report due Nov. 23.

“The economy has hit the bottom and is on its way to recovery as exports pick up,” said Jackit Wong, a regional economist at Natixis Asia Ltd. in Hong Kong.

The yield on the 1.125 percent notes due September 2022 was 1.121 percent, compared with 1.118 percent yesterday, according to Gretai Securities Market. That’s the highest level since Nov. 12.

The U.S. government and lawmakers held a new round of deficit-reduction negotiations this week in a bid to thwart automatic tax increases and spending cuts that threaten to throw the country into recession next year. Federal Reserve Chairman Ben S. Bernanke said yesterday an agreement on reducing long-term budget deficits will remove an impediment to growth in the world’s biggest economy.

“Bernanke’s words boosted optimism about the economic outlook,” said Albert Lee , a fixed-income trader at Cathay United Bank Co. “This risk-on sentiment led to a rise in yields.”

Taiwan’s dollar weakened 0.1 percent to NT$29.179 against its U.S. counterpart, based on Taipei Forex Inc. prices. The currency touched NT$28.959 on Nov. 12, the strongest level since September 2011. One-month implied volatility dropped 20 basis points, or 0.2 percentage point, to 3.6 percent.

The overnight interbank lending rate was little changed at 0.383 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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