* Indonesia 10-year bond yields hit lowest level since Feb
17
* U.S. inflation posts biggest y/y rise in 12 years
* Fed, BoJ, Bank Indonesia policy meetings next week
By Nikhil Nainan
June 11 (Reuters) - Indonesia's rupiah led gains across
Asia's risk-sensitive currencies on Friday, with bond yields at
four-month lows, after U.S. inflation data was enough to
convince investors price rises may be transitory and not affect
U.S. monetary stimulus for now.
South Korea's won and Taiwan's dollar
also gained around 0.4% as the greenback nursed small losses on
the back of the inflation report that had kept traders in Asia
on their toes all week, looking for any signal that it may
prompt the Federal Reserve to discuss early tapering.
The overnight data showed U.S. consumer prices up 5%
year-on-year, the sharpest rise in 12-years. But hefty
contributions to that from short-term rises in airline ticket
prices and used cars raised questions about how long the jump
might last.
U.S. Treasury yields fell to lows not seen since
early March, with traders saying short-covering was driving the
rally.
"With the global market backdrop turning more constructive
for bond investments, investors may re-focus on yield
differentials," OCBC Bank analysts said in a note.
Asia's emerging market currencies and bonds traditionally
yield more than their peers in developed markets, though are
considered riskier.
The yield on Indonesia's 10-year bonds, which
offer some of the highest returns in emerging markets, fell to
6.324%, the lowest level since mid-February.
Stocks markets in the region also largely gained, with South
Korea and Thailand leading the way with a rise
of half a percent.
In a sign of confidence, the Thai central bank has allowed
banks to pay interim dividends, saying they have sufficient
capital to deal with the impact of COVID-19 outbreaks. The
country's top banks were up around 1%.
In Singapore, shares were flat and the local dollar
marginally higher.
The city-state on Thursday announced a phased easing of its
COVID-19 restrictions from next week with expectations for a
reopening largely factored in already. Analysts think the
bank-and-landlord-heavy Singapore benchmark has further to rise.
"I think in the Singapore market, there are still pockets of
opportunities to buy into some of these sectors which have not
done as well as, and not priced as much of the optimism," said
Carmen Lee, Head of OCBC Investment Research.
Lee added that the financial sector has done well, but has
more upside.
With U.S. inflation data out of the way, eyes will now turn
to the Fed's policy meeting next week, which will happen
alongside local meetings by Indonesia, Taiwan and Japan.
HIGHLIGHT:
** Thailand's 10-year government bond yields fell 2 basis
points to 1.67%
** S.Korea to begin normalising monetary policy when economy
sustains recovery - central bank
Asia stock indexes and currencies at 0356 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY % YTD % DAILY % YTD %
Japan -0.07 -5.62 -0.02 5.49
China +0.09 +2.22 -0.25 3.71
India +0.00 +0.02 0.37 12.98
Indonesia +0.39 -1.06 -0.05 2.10
Malaysia +0.16 -2.24 -0.27 -3.17
Philippines +0.06 +0.67 0.09 -3.61
S.Korea +0.42 -2.24 0.55 12.84
Singapore +0.12 -0.07 0.02 11.23
Taiwan +0.39 +3.22 0.39 16.93
Thailand +0.29 -3.60 0.52 12.72
(Reporting by Nikhil Kurian Nainan in Bengaluru and Chen Lin in
Singapore; Editing by Kenneth Maxwell)
