Malaysian Prime Minister Najib Razak’s promise of measures to curb the budget gap and avert a credit-rating downgrade helped send three-year government bond yields to a four-month low. His resolve is about to be tested.
Malaysia’s three-year government bonds are having the best week since January as speculation the U.S. will delay paring stimulus beyond 2013 fueled demand for emerging-market assets. The ringgit gained for a third week.
India’s 10-year government bonds capped a second week of gains, the longest stretch since May, after the Reserve Bank of India rolled back some measures taken to shore up the rupee following a rebound in the currency.
Malaysia’s ringgit gained the most in two weeks on speculation the U.S. government shutdown will delay the tapering of stimulus that has fueled gains in emerging- market assets. Government bonds advanced.
Investors should employ a so-called “butterfly” swap strategy in India to profit from higher borrowing costs as a recovery in Asia’s third-largest economy stokes inflation, according to Morgan Stanley.
The worst is over for Asian emerging markets after investors pulled billions of dollars last month on concern the U.S. Federal Reserve will start cutting back bond purchases, according to Nomura Holdings Inc.
India’s bonds due 2022 rose, sending the benchmark yield to the lowest in almost three years, on optimism cooling inflation will allow the central bank to add to this year’s three interest-rate cuts. The rupee weakened.
India’s rupee advanced the most this month after the central bank raised two interest rates to support the currency, which sank to a record this month. Bonds plunged the most since 2009 and stocks fell.