Asian bond spreads narrowed on Thursday, lifted by unexpectedly strong US economic data overnight, but expectations of more supply capped gains in South Korean bonds. A rebound in US durable goods orders and higher sales of newly built single-family homes sparked hopes that Asias top export market is recovering from recession.
The Asia iTraxx investment-grade index excluding Japan, a key measure of risk aversion, narrowed 5 basis points to 350/355, trader said. The MSCI index of Asia-Pacific stocks outside Japan was up 1.1 percent at 0309 GMT. South Koreas five-year CDS narrowed 5 bps to 340/355, tracking gains in the broader market.
But the governments plan to sell at least $1 billion global bonds limited their gains, traders said. Philippines cash bonds rebounded, with the countrys 8.375 percent bond due in 2019 trading at 110.25/110.375 from 110.125 on Wednesday trader said.