SOUTH KOREA: First 20 days Exports Rise in March.

Today’s auction showed strong pricing for ACGBs, with the weighted average yield coming in 0.63bps below prevailing mid-yields, according to Yieldbroker. Additionally, the cover ratio rose to 4.1437x from an already robust 4.000x at the previous auction. 

• As noted in our preview, the current yield was approximately 10bps higher than at the prior auction, likely contributing to the robust demand. Improved sentiment toward longer-dated global bonds over recent weeks, along with a steeper 3s/10s yield curve, also likely supported the auction’s success.
• Post-auction, both the cash line and XM are slightly cheaper.

Japan's January trade figures were mixed. Exports rose 7.2% y/y, close to the 7.7% forecast and up from the prior 2.8% pace. Imports surged though to 16.7%y/y, from 1.7% in Dec and against a 9.3% forecast. Not surprisingly, this drove weaker than forecast trade balance outcomes. The headline deficit was -¥2758.8bn, versus a ¥132.5bn surplus prior. In seasonally adjusted terms, the deficit was -¥856.6bn, versus -¥221.0bn prior. 

• Exports were still down -2.0% in m/m terms. The y/y rise in exports puts Japan a little out of line with other NEA export orientated economies. These economies saw slower y/y momentum for Jan. Exports to China fell 6.2%y/y, and down 15.1% to the EU, but rose to the US 8.1%. The trade surplus with the US was down from Dec's level, falling by more than half.  
• In volume terms exports were down 1.7% y/y, compared to Dec's pace of -2.6%.
• Import volumes were much stronger up 8.7% y/y. This is the strongest pace since 2021 in y/y terms. Import volumes were positive in y/y terms from all key regions, including the US (+2.4%), which could be an ongoing focus point as countries look to avoid tariff penalties from the US (by purchasing more from the US).
• It may also signal a firmer domestic demand backdrop. The chart below overlays import volumes y/y versus y/y real GDP growth. Import trends tend to volatile though (the white line on the chart)
• The weaker trade deficit position unwinds a modestly improving trend we saw through Q4 last year.  

Fig 1: Japan Import Volumes & GDP Y/Y 

Source: MNI - Market News/Bloomberg 

The AOFM sells A$800mn of the 2.75% 21 June 2035 Bond, issue #TB145:

• Average Yield (%): 4.5607 (prev. 4.4684)
• High Yield (%): 4.5625 (prev. 4.4700)
• Bid/Cover: 4.1437x (prev. 4.0000x)
• Allotted at Highest Accepted Yld as % of Amount Bid at that Yld (%): 56.6 (prev. 64.5)
• Bidders: 41 (prev. 40), successful 16 (prev. 15), allocated in full 9 (prev. 9)