Taiwan’s government bonds declined as the island’s benchmark share index rallied to a 21-month high following U.S. jobs data that added to optimism the world’s largest economy is improving.
The unemployment rate in the U.S., Taiwan’s second-biggest export market, fell to a four-year low and payrolls expanded more than economists forecast, reports showed on May 3. Global funds bought $114 million more Taiwanese stocks than they sold today, following last week’s $1.2 billion in net purchases, exchange data show. The “exceedingly accommodative” monetary policies of developed nations are increasing volatility in emerging markets with large capital flows, Taiwan’s central bank said in a May 4 statement.
“There’s some temporary selling pressure for bonds today as the U.S. payrolls data was good,” said Stanford Chen, a fixed-income manager at KGI Securities Co. in Taipei. “But there’s just so much money in Taiwan now. The recent rallies in both bonds and stocks should continue.”
The yield on the 0.875 percent bonds due January 2018 rose two basis points to 0.88 percent, according to Gretai Securities Market prices. The yield touched 0.86 percent on May 3, the lowest level for a benchmark five-year security since July 26, 2012.
Taiwan’s consumer price index rose 1.04 percent in April from a year earlier, the least in 14 months and less than the 1.26 percent median estimate of economists in a Bloomberg survey, official data showed today.
The Taiwan dollar was little changed at NT$29.626 against its U.S. counterpart, Taipei Forex Inc. prices show. The currency touched NT$29.42 on April 30, the strongest level since Jan. 28.
The local dollar was trading 0.2 percent stronger three minutes before the 4 p.m. close. The central bank has sold the currency in the run-up to the close on most days in the past year, according to traders who asked not to be identified.
One-month non-deliverable forwards weakened 0.1 percent to NT$29.545 against the greenback, data compiled by Bloomberg show. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 12 basis points, or 0.12 percentage point, to 3.52 percent.
The overnight interbank lending rate was steady at 0.385 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.