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Inflation Concerns Push Up Emerging East Asia Bond Yields.

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ENPNewswire-November 26, 2021--Inflation Concerns Push Up Emerging East Asia Bond Yields

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Release date- 26112021 - Inflation Concerns Push Up Emerging East Asia Bond Yields.

Emerging East Asia's bond market grew 3.4% in the third quarter to $21.7 trillion, although rising global inflation and a shift in the United States (US) monetary stance weakened regional financial conditions, according to the latest issue of the Asia Bond Monitor.

Bond yields rose, currencies weakened, and risk premiums edged up amid increased global inflation and the US Federal Reserve's announcement that it would limit bond purchases starting in November, according to the report, released today by the Asian Development Bank (ADB).

'The encouraging macroeconomic outlook and accommodative policy stances are supporting the region's financial conditions,' said ADB Acting Chief Economist Joseph Zveglich, Jr. 'However, central banks in the region may find they need to be less accommodative to keep inflation in check and to keep in step with US monetary policy changes. That said, the chance of another 'taper tantrum' is limited as the direction of the Federal Reserve's stance is clearly communicated and the region's economic fundamentals remain strong.'

Emerging East Asia comprises the People's Republic of China (PRC); Hong Kong, China; Indonesia; the Republic of Korea; Malaysia; the Philippines; Singapore; Thailand; and Viet Nam.

Government bonds remained the dominant segment, increasing 3.9% from the previous quarter to $13.6 trillion. The bond markets of the Association of Southeast Asian Nations (ASEAN) members-many of which suffered from the coronavirus disease's (COVID-19) Delta variant outbreak-grew 14.4% from a year earlier to $1.9 trillion in the third quarter, compared with 12.6% and 7.6% growth in the PRC and the Republic of Korea, respectively.

ASEAN bond markets showed sound market capacity during the pandemic, evident in low bond yields amid rapid market expansion. Domestic financial institutions, particularly banks, anchored bond market functioning. At the same time, a few ASEAN central banks facilitated market liquidity and government financing via asset purchasing programs. Mid- and long-term bonds...

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