Taiwan’s government bonds fell for a fourth day, driving the biggest advance in the 10-year yield since June 2011, on optimism demand for the island’s exports will improve as the U.S. economy recovers.
Taiwan’s Taiex index of shares rose through 8,000 today, only the fourth time it has done so since March last year, after the Dow Jones Industrial Average reached a record high yesterday. Payrolls in the U.S., the island’s second-biggest overseas market, increased 165,000 in February after a 157,000 gain the prior month, while the jobless rate probably held at 7.9 percent, separate Bloomberg News surveys showed before data due today.
“The record-high performance in the Dow and the Taiex rally are driving the rise in yields,” said Max Liu, a fixed-income trader at Capital Securities Corp. in Taipei. Some traders are boosting bets on further slides in bonds, he said.
The rate on the 1.125 percent notes due March 2023 climbed six basis points, or 0.06 percentage point, to 1.28 percent, the highest level since April 2012, according to prices from Gretai Securities Market. It rose seven basis points this week.
Global funds bought $136 million more Taiwanese stocks than they sold today, taking net purchases this year to $2.1 billion, according to exchange data.
The Taiwan dollar weakened 0.1 percent today and 0.2 percent from the end of last week to NT$29.718 against its U.S. counterpart, based on prices from Taipei Forex Inc. It touched NT$29.77 on March 5, the weakest level since September.
The central bank has sold the local currency near the close on most days in the past 11 months, according to traders who asked not to be identified.
One-month non-deliverable forwards weakened 0.1 percent to NT$29.648 per U.S. dollar today and were little changed for the week, according to data compiled by Bloomberg. Implied volatility, a measure of expected moves in the exchange rate over a month used to price options, fell 15 basis points to 3.79 percent today.
Taiwan’s exports dropped 15.8 percent last month from a year earlier, following a revised 21.6 percent increase in January, official data showed yesterday. The decline was probably due to seasonal factors associated with the Chinese New Year holidays, Credit Agricole CIB analysts led by Adam Myers in London, wrote in a research note.
The overnight interbank lending rate was steady at 0.388 percent, according to the Taiwan Interbank Money Center.