Coronavirus rate cuts to drag most Asian bond yields even lower – Reuters poll

According to the latest Reuters poll 12 fixed income strategists, yields on sovereign bonds across most major Asian economies remain exposed to further downside risks over the coming year.

The Asian bond yields are already hammered down by the emergency interest rate cuts by central banks to combat the economic impact of the coronavirus crisis.

Key findings

“A majority of them believe that the trend was unlikely to continue much longer, as the recent rise in yields was just a knee-jerk reaction to the massive amount of fiscal stimulus dead ahead.

Indonesia 10-year bond yields were forecast to take the biggest hit, falling about 160 basis points to 6.76% in a year's time according to the median forecast.

Expectations for further easing led strategists to cut predictions for China's 10-year bond yield, which is now forecast to fall to 2.63% by end June.

Some respondents said the fundamental relationship between interest rates and yields has broken as desperate traders are dumping government bonds and hoarding cash.”