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Taiwan 10-Year Yield Rises to One-Week High as Stocks Rally

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Dec. 5 (Bloomberg) -- Taiwan’s government bonds fell, pushing the benchmark 10-year yield to a one-week high, as optimism about China’s economic outlook spurred demand for riskier assets. The local dollar gained for a second day.

The Taiex index of shares rallied for a 10th day, the longest winning streak since November 2006. China’s new leadership pledged to keep macroeconomic policies stable and make efforts to ensure steady investment growth, the official Xinhua News Agency reported yesterday, citing a statement issued after a meeting of the ruling party’s top leaders headed by Xi Jinping.

“China’s policy optimism boosted risk-on sentiment in the market today,” said Albert Lee, a fixed-income trader in Taipei at Cathay United Bank Co. “But volumes have gone significantly lower as the end of the year approaches.”

The yield on the government’s 1.125 percent bonds due September 2022 rose to 1.137 percent, compared with 1.134 percent yesterday, according to Gretai Securities Market. That’s the highest level for the benchmark 10-year rate since Nov. 26.

Global funds bought $216 million more Taiwanese stocks than they sold today, taking net purchases in the past five days to $1.4 billion, according to exchange data.

Taiwan’s dollar rose 0.1 percent to NT$29.102 against its U.S. counterpart, based on Taipei Forex Inc. prices. One-month implied volatility, a measure of expected moves in exchange rates used to price options, advanced eight basis points, or 0.08 percentage point, to 3.30 percent.

The overnight interbank lending rate was steady at 0.384 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

To contact the reporters on this story: Andrea Wong in Taipei at awong268@bloomberg.net; Argin Chang in Taipei at achang153@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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