Markets Mid-day Briefing – Fri Feb 3, 2012

So far in Asia, Singapore has topped the gainers with a 0.8% rally.

RBS reported:

Except for HKD and SGD, regional swap curves bull-steepened as front end rates came down across the board.

In China, liquidity conditions improved, with the 7d repo fixing falling by 102bp to 3.32%. This dragged the front end of the NDIRS curve down by 4-5bp.

Although liquidity was expected to be returned by the banks after the Lunar New Year break, the amount seems to be larger-than-expected given the sharp drop in the fixing. Hence, there was market chatter that the PBOC might have rolled over some of the maturing 14d reverse repos it conducted before the holiday break.

In India, the RBI will conduct INR100bn of bond purchases via its open market operations today, which will likely support today's INR130bn of government bond auctions. Separately, the government announced that it will no longer release weekly primary and food inflation data based on the Wholesale Price Index.