AUD & USD Asian Bond Prices Update

18/01/2015 by

Asians and Australia should be relatively shielded from the Swiss debacle. Yet the effects will continue to reverberate as we hear of more casualties with new announcements daily like this one today.

“Marko Dimitrijevic, the hedge fund manager who survived at least five emerging market debt crises, is closing his largest hedge fund after losing virtually all its money this week when the Swiss National Bank unexpectedly let the franc trade freely against the euro, according to a person familiar with the firm.

Everest Capital’s Global Fund had about $830 million in assets as of the end of December, according to a client report.” http://www.bloomberg.com/news/2015-01-17/swiss-franc-trade-is-said-to-wipe-out-everest-s-main-fund.html

Asia also saw some tremours on all these Chinese projects stalling which is not good for investor sentiments even if it is good for traders. Kaisa continues to flounder, dropping 5-6 cts after sales were blocked in another province and Fantasia had to step up to clarify that their reported block sales were sold 4 years ago. China Overseas Land may have to do the same soon for a similar report.

Oil prices are now on the back burner as the frenzy turns to forex which is a good sign and buys the breathing room we all need to reassess the bonds which we should be selling. Like I said, we have not seen oil prices fall for 3 consecutive quarters since 2003 and it is all likely we shall see a rebound in 1Q that will definitely not match the 60% drop we have seen since Jun 2014.

Bond prices are buoyed by the record low US and European government yields now that we should not take for granted like we did for the EURCHF peg. Yet I note that liquidity is under great stress especially in high yield space.

Leaving you with the indicative bond prices and wishing everyone a happy weekend into next week’s central bank meetings.