Bloomberg News

Taiwanese 10-Year Bonds Decline for Third Day on U.S. Outlook

March 07, 2013

Taiwan’s 10-year bonds fell for a third day, the longest losing streak in a month, as more data suggesting the U.S. economy is improving encouraged risk-taking and damped demand for government debt.

Companies in the U.S., the island’s second-biggest export market, added 198,000 workers last month, more than the 170,000 projected in a Bloomberg survey, a report showed yesterday. Global funds bought $33 million more Taiwanese stocks than they sold today, taking net purchases this year to $2 billion, according to exchange data. The Ministry of Finance will release its bond-sale plan for next quarter at the end of this month.

“Investors are getting more and more confident about the U.S. economy,” said Albert Lee, a fixed-income trader in Taipei at Cathay United Bank Co. “Sentiment will probably stay risk-on until the end of the month. Then we have to pay attention to the bond-sale plan.”

The yield on the 1.125 percent notes due March 2023 rose one basis point to 1.22 percent, according to prices from Gretai Securities Market. That was the highest level since Feb. 25.

Taiwan’s exports dropped 15.8 percent last month from a year earlier, following a 21.8 percent increase the previous month, official data showed today. The decline was probably due to seasonal factors, Credit Agricole CIB analysts led by Adam Myers in London wrote in a note today.

Currency Market

The Taiwan dollar weakened 0.1 percent to NT$29.695 against its U.S. counterpart, based on prices from Taipei Forex Inc. It touched NT$29.77 on March 5, the weakest level since September 2012. One-month non-deliverable forwards were little changed at NT$29.625, according to data compiled by Bloomberg.

The central bank has sold the local currency near the close on most days in the past 11 months, according to traders who asked not to be identified.

One-month implied volatility in the Taiwan dollar, a measure of expected moves in the exchange rate used to price options, fell two basis points, or 0.02 percentage point, to 4 percent. The overnight interbank lending rate was steady at 0.388 percent, according to the Taiwan Interbank Money Center.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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