Oil prices under pressure; positive data from Turkey; Asian bonds mixed; Slovenia plans notes

By Christine Van Dusen

Atlanta, Aug. 23 – Slovenia advanced a deal and Asian bonds were mixed on a low-volume Tuesday that saw oil prices set the tone for emerging markets assets, most notably those from the Middle East.

Middle Eastern bonds are feeling the pressure of oil prices, a London-based analyst said.

Looking to Latin America, spreads finished mostly unchanged on the day, with Mexico underperforming on the news that a downgrade could be coming, a New York-based trader said.

The sovereign’s five-year credit default swaps spreads closed at 136 basis points from 135 bps but did trade as tight as 132 bps prior to the news, he said.

From Asia, sovereign bonds were mixed on Tuesday, with Indonesia’s 10-year notes lower by 20 bps, Malaysia’s 10-year up by 19 bps and China’s 2027s higher by 39 bps, a trader said.

“Flows did pick up versus yesterday but continue to be on the lighter side, with better buying as the dominant theme,” the New York trader said. “The market currently appears to be in a bit of a summer holding pattern with few catalysts ahead of Friday’s Jackson Hole [meeting], which should ignite some volume into this otherwise quiet market.”

In news from Turkey, new economic data revealed that consumer confidence is strong, even in the face of political tumult, the analyst said.

Bonds were strong into the close, with spreads holding at 10 bps tighter in the belly of the curve, a trader said.

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