Developed markets and Asian government bond yields generally down since Fed liftoff

Asian government bond yields and developed markets are largely down since Fed liftoff in December. Much of this came on the back of a selloff in equity markets and increasing concerns on the Chinese economy. US and UK government bond yields posted significant declines as rate hike expectations were pushed further back. 

HKgov bonds bucked the trend, underperforming as outflows nudged the USD/HKD to the weaker side of the band, putting upward pressure on HKD rates. This spike in HKD rates proved transitory but a slight risk premium is lingering on HKgov yields. 

Yields are similarly down in Asia. This marks a big difference from the selloff last August/September last year when the weakening of the RMB fixing triggered a selloff in Asian government bonds (IDgov bonds and MGSs in particular). Interestingly, persistent weakness in commodity prices over the past few weeks did not put upward pressure on IDgov or MGS yields. These bonds were in fact the better performers as a dovish tilt by Bank Indonesia and Bank Negara Malaysia provided support. 

"On balance, we remain cautious on IDgov bonds and MGSs. While further easing could benefit these bonds, weak sentiment and depressed commodity prices bear watching", says DBS Group Research.