Bonds

Global hedge funds have significantly increased their exposure to Asian equity markets, marking the sharpest rise in regional trading volumes in over five years, according to a recent note from Goldman Sachs $GS. Between June 6 and June 12, long positions across Japan, Hong Kong, Taiwan, and India surged to the highest levels since September 2024, highlighting a renewed appetite for risk despite macroeconomic uncertainty.

The depreciation of the U.S. dollar (USD) has triggered a notable resurgence in a long-overlooked asset class: emerging market (EM) local currency debt. After more than a decade of subdued investor interest, funds flowing into EM local-currency bonds hit a record high, according to data from EPFR for the week ending Wednesday.

The long-running legal saga surrounding Venezuela’s U.S.-based oil refining asset—Citgo Petroleum—has reached a decisive phase, as the Delaware court-supervised auction of its parent company, PDV Holding Inc., approaches its conclusion. Multiple bidders have submitted enhanced offers in the final round of the auction, hoping to acquire one of the most strategic oil refining operations in the United States.

This week, the trajectory of Indian government bonds and the Indian rupee (INR) will largely be driven by developments in the Israel–Iran conflict and the resulting impact on global crude oil prices. The Reserve Bank of India (RBI) is expected to play a pivotal role in managing currency volatility as geopolitical tensions ripple across emerging markets.

India’s National Bank for Agriculture and Rural Development (NABARD) has received federal approval to raise up to ₹195 billion ($2.3 billion) through deep-discount zero-coupon bonds. These long-dated instruments, maturing in nearly 11 years, mark a significant financing step for the state-owned development bank as it intensifies efforts to support rural infrastructure, agribusiness, and credit flow in underserved regions.

Seazen Group Ltd. $1030.HK is reportedly preparing to issue USD-denominated bonds totaling between $200 million and $300 million, marking one of the few recent offshore financing attempts by a Chinese real estate developer. The proposed bonds would mature in 2.5 years, with issuance targeted for June 2025, according to sources familiar with the matter. This potential deal comes at a time when China’s property sector remains under significant financial stress, weighed down by declining sales, tight regulatory controls, and limited access to capital markets. Seazen’s initiative may signal a tentative reopening for offshore debt markets to selected issuers deemed relatively stable within the battered industry.

The Bank of Japan (BOJ) is preparing to slow the pace of its bond purchase tapering starting from fiscal year 2025, according to sources close to the central bank’s internal discussions. This anticipated adjustment is driven by elevated volatility in the Japanese government bond (JGB) market, particularly in ultra-long maturities. The move reflects BOJ's effort to balance monetary policy normalization with the need to prevent disruptions in the fixed-income market.

As central banks worldwide tighten monetary policy in response to persistent inflation, the Bank of Japan (BOJ) stands out for maintaining one of the most accommodative stances among developed economies. In a significant shift, however, the BOJ has set aside the maximum possible reserve—100%—to cover potential losses from its bond holdings in fiscal year 2024, signaling deeper concerns about the impact of rising interest payments on its capital position.

U.S. equity indices closed lower on Wednesday as participants shifted into a defensive posture before key financial disclosures from Nvidia Corp. $NVDA. The S&P 500 Index $^SPX dipped 0.6%, reversing advances from the prior session’s risk-driven rally. Technology-heavy Nasdaq 100 $^NDX followed suit, sliding 0.5%. The adjustment underscores the volatile anticipation surrounding corporate performance, particularly from heavyweight tech constituents.

Argentina recently executed its first major bond issuance in seven years, raising $1 billion USD through peso-denominated bonds. This sale marks a notable milestone, reflecting a tentative restoration of trust by global investors in a country that has been grappling with persistent economic instability and triple-digit inflation. The offering represents both a critical test of Argentina’s ability to access international capital markets and a gauge of investor appetite for emerging market sovereign debt under challenging conditions.

The perpetual bonds of New World Development Co. $0017.HK experienced a significant price decline, reaching the lowest point in three months. This downturn was driven by rising doubts among investors over whether the company will proceed with its June coupon payment. The 6.15% USD perpetual note plunged by over four cents, settling at 54.8 cents on the dollar by 16:23 HKT—a level last seen in February. Other dollar-denominated bonds from the developer also slid, shedding around two cents each as market risk aversion increased.

Japan’s Ministry of Finance conducted a crucial auction of 40-year government bonds on Wednesday, selling approximately JPY 500 billion (~USD 3.46 billion). The auction’s poor performance underscored growing unease about Japan’s sovereign debt outlook, as the bond market continues to grapple with concerns over budget deficits and global interest rate volatility. This event highlights the fragility in long-term sovereign debt markets and echoes warnings from major financial institutions like Goldman Sachs.