HONG KONG, Jan 22 (IFR) - Asian bond yields tightened only modestly ahead of a key European Central Bank meeting in which initial reports suggested it would unveil an aggressive EUR50bn asset purchasing programme. Bond traders felt that any upcoming ECB moves were already largely priced in.
Asian sovereign yields moved around three to five basis points tighter, but traders said it appeared that investors were actually beginning to move into riskier assets such as equities.
“We’re actually seeing something of a sell-off in the space actually,” said a sovereign trader. “It hasn’t fallen off a cliff, but it feels like people are taking profits and looking at riskier assets.”
Equity indices were broadly up despite slipping earlier in the session. The Hang Seng led the way with gains of nearly 1% on the day while the Shanghai and Taiwan markets were up just over half a percentage point.
Investment grade traders described it as a fairly stable market session. The belief was that many in the market were still waiting to see what the ECB would do.
However, new names such as Baosteel and Reliance Industries performed well and saw yields move 10-15bp tighter. ANZ’s foray into the Basel III Dim Sum space attracted a bigger than expected order book and traded slightly above par.