Asia-Pacific Rates The double whammy

Research evidence excerpt

Asia-Pacific Rates The double whammy

21 May 2026

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Asia-Pacific Rates FixedRates Income

The double whammy

◆ Inflation and fiscal fears have driven bond market sentiment Pin Ru Tan

Head of APAC Rates Strategy

◆ Peak concerns are still likely ahead of us The Hongkong and Shanghai Banking Corporation

Limited, Singapore Branch

pin.ru.tan@hsbc.com.sg

◆ Yet, pockets of value have emerged in some bond markets +65 6658 8782

Duncan Tan

Asia bonds had a poor month, with inflation fears materially outweighing growth APAC Rates Strategist The Hongkong and Shanghai Banking Corporation

concerns, and fiscal worries in Japan and the UK adding fuel to the bond rout. China Limited, Singapore Branch

duncan.tan@hsbc.com.sg

bonds were the standout haven, supported by very flush onshore liquidity following +65 6658 7255

renminbi appreciation. We continue to work with the assumption that inflation and fiscal Justin Heng

fears have yet to peak, while being mindful that rates volatility could remain high given APAC Rates Strategist

The Hongkong and Shanghai Banking Corporation Limited

the state of flux in the Strait of Hormuz. On what could push yields higher from here, justin.heng@hsbc.com.hk

the continued impasse in the Strait of Hormuz should reinforce the outlook that commodity +852 2288 9778

prices will remain higher for longer. As we move into 2H, the impact of El Nino on food Soumya Mohanty, CFA

Analyst, APAC Rates Strategy

prices will come into sharper focus. On the fiscal front, Japan’s Basic Policy on HSBC Securities and Capital Markets (India) Private

Economic and Fiscal Management and Reform is due around mid-June and could Limited

soumya.ranjan.mohanty@hsbc.co.in

stoke further bond supply concerns. +91 80 6827 3548

Chandra V R