Taiwan Bonds Rally After CPI Data as Currency Advances
Taiwan’s bonds rallied the most in at least seven months after local inflation slowed more than forecast and U.S. companies created fewer jobs than economists predicted. The island’s dollar strengthened.
Consumer prices rose 0.08 percent in July from a year earlier, the statistics bureau reported today in Taipei, compared with the median estimate of a 0.6 percent gain in a Bloomberg survey. U.S. data Aug. 2 showed employers added 162,000 workers in July, short of the 185,000 increase projected in a separate survey. The Federal Reserve has said it may pare $85 billion a month in asset purchases as early as September.
“The CPI is one reason” for today’s strong rally in bonds, said Allen Chu, a fixed-income trader at President Securities Corp. (2855) in Taipei. “Another reason is that the Fed won’t taper its stimulus any time soon. Buying momentum should continue.”
The yield on the 0.875 percent government notes due January 2018 fell seven basis points to 1.11 percent as of 9:53 a.m. in Taipei, the biggest decline since the debt was sold in December, according to Gretai Securities Market. The rate advanced 10 basis points last week.
The overnight interbank lending rate was steady at 0.388 percent, the weighted average compiled by the Taiwan Interbank Money Center showed.
Taiwan’s dollar appreciated 0.6 percent to NT$29.958 against its U.S. counterpart after losing 0.6 percent last week, Taipei Forex Inc. prices show. It reached NT$29.930, the highest level since July 30.
One-month non-deliverable forwards climbed 0.1 percent to NT$29.966, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, dropped 31 basis points, or 0.31 percentage point, to 3.51 percent.
To contact the reporter on this story: Kyoungwha Kim in Singapore at email@example.com