Asia Steps Up Bond Support as Energy Shock Sends Yields Surging

A surge in Asian bond yields this month has prompted increased debt buying across the region as governments attempt to limit spillovers from higher energy prices to local borrowing costs. Expect continued risk-off positioning in Asian sovereign bond markets, potential near-term cap on yields from government demand but elevated volatility and fiscal pressure on budgets.

Analysis

A surge in Asian bond yields this month has prompted increased debt buying across the region as governments attempt to limit spillovers from higher energy prices to local borrowing costs. Expect continued risk-off positioning in Asian sovereign bond markets, potential near-term cap on yields from government demand but elevated volatility and fiscal pressure on budgets.