Asian bond spreads narrowed on Friday, reflecting the improving outlook for US banks and signs that US consumer spending is stabilising. An assurance from the chief executive of Bank of America that the lender will make money this year and a smaller-than-forecast drop in US retail sales have sparked a rally in Asian shares on Friday.
The Asia iTraxx investment-grade index excluding Japan, a key measure of risk aversion, narrowed to 420/430 basis points from 430/440 on Thursday, a Hong Kong-based trader said. For the week, the index has tightened by 40 bps. The MSCI index of Asia-Pacific stocks outside Japan was up 2.6 percent at 0312 GMT.
South Koreas five year CDS narrowed to 400/420 bps from 425, tracking gains in the broader market. The wons recovery from 11-year lows also helped boost sentiment on the nations debt, an analyst said. Philippines bonds gained for a third day, on demand from onshore and offshore investors covering short positions after a recent selloff, a Manila-based trader said. The countrys 8.375 percent bond due in 2019 rose to 108.00/108.25 from 106.75/107.00 on Thursday, the trader said.
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