Asian bond spreads narrowed for a second straight session on Thursday, as investors cheered the Federal Reserve's upbeat assessment of the US economy, boding well for Asia's export-driven economies. The US economic contraction appears to be slowing, the Fed said, while a report that consumer spending rose 2.2 percent in the first quarter further raised hopes that Asia's top export market is stabilising.
The Asia iTraxx investment-grade index excluding Japan tightened to 275/290 basis points from 298/308 on Wednesday, a Hong Kong-based trader said. The MSCI index of Asia-Pacific stocks outside Japan was up 3.7 percent as of 0303 GMT. The following were the major movers in cash bonds and credit default swaps (CDS):
China's five-year CDS tightened to 120/135 bps from 133/145, as rising US consumer spending would help boost the country's exports, traders said. South Korea's five-year CDS narrowed to 250/250 bps from 275/285, tracking the broader market's performance, traders said. A record surplus in the current account also kept investors upbeat.
Philippines' cash bonds rose for a second day as local investors bought the country's debt, while offshore investors were covering short positions after a recent selloff, a Manila-based trader said. The country's 8.375 percent bond due in 2019 traded at 111.00/111.25 from 110.625. The country's five-year CDS narrowed to 293/303 bps from 310/320, the trader said.