Taiwan Bonds in Longest Losing Streak Since 2006 on Fed OutlookJustina Lee and Argin Chang
Taiwan’s 10-year bonds fell for a seventh day in the longest stretch of losses since 2006 on speculation the Federal Reserve may bring forward the timing of a rate increase as the U.S. economy recovers.
The yield on the island’s 1.625 percent notes due September 2024 climbed three basis points, or 0.03 percentage point, to 1.746 percent in when-issued trading, GreTai Securities Market prices show. That’s the highest rate for benchmark 10-year securities since Sept. 14, 2013.
Treasuries are the world’s worst-performing debt this quarter amid bets the Federal Open Market Committee may announce guidance on the likely path of borrowing costs at a meeting next week. U.S. data this week is forecast to show jobless claims dropped and retail sales rose. Taiwan’s Chunghwa Post Co., which had NT$6.2 trillion ($207 billion) of assets as of the end of 2013, pulled money from local debt last month for the first time since 2010, according to GreTai figures.
“Treasuries have been reflecting expectations that the FOMC may be more hawkish at their meeting,” said Daniel Wu, a Taipei-based bond trader at EnTie Commercial Bank. “Buyers are becoming more cautious, unless it’s clear that the bonds’ end users, such as Chunghwa Post, are buying again.”
Taiwan’s 1.125 percent debt due July 2019 also declined, with the yield advancing four basis points to 1.273 percent, the highest for benchmark five-year notes since January 2009.
Taiwan’s dollar weakened 0.1 percent to NT$30.060 against its U.S. counterpart, prices from Taipei Forex Inc. show. One-month non-deliverable forwards were little changed at NT$29.977, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, increased one basis point to 2.59 percent.