Bloomberg News

Taiwan Ten-Year Yields Lowest in Four Weeks on Growth Concern

July 10, 2012

Taiwan’s government bonds gained, pushing the benchmark 10-year yield to the lowest level in four weeks, as a fourth month of falling exports added to signs the island’s economy is slowing. The local dollar was steady.

Overseas sales dropped 3.2 percent in June from a year earlier, official data showed yesterday. Economists in a Bloomberg survey expected a 2.3 percent increase. Spanish 10- year bond yields climbed above 7 percent on concern euro-area finance ministers meeting in Brussels this week will fail to find ways to help governments in the region pay their debts.

“The bad export data adds to pessimism on our economic outlook,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co. “The next psychological level for 10- year yields will be 1.185 percent.”

The yield on the 1.25 percent bonds due March 2022 dropped two basis points, or 0.02 percentage point, to 1.19 percent, according to Gretai Securities Market. That’s the lowest level for the benchmark 10-year yield since June 13.

The Taiwan dollar traded at NT$29.985 against its U.S. counterpart, compared with NT$29.975 yesterday, according to Taipei Forex Inc. It touched NT$30.010 yesterday, the weakest level since June 26. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 3.84 percent.

The overnight interbank lending rate was steady at 0.509 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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