Asia Local Markets Weekly: Market disconnects and emerging opportunities

Research evidence excerpt

Asia Local Markets Weekly: Market disconnects and emerging opportunities

Deutsche Bank

Research

Asia Fixed Income Date

Emerging Europe 16 July 2026

Japan Asia Local Markets

Latin America

Weekly

Market disconnects and emerging

opportunities

Perry Kojodjojo

EM beta-break score has normalised, with LatAm, Indonesia, and Malaysia all

Strategist

returning to normal territory, leaving only Korea 10y swaps, Hungary (idiosyncratic, +852-2203-6153

post-election sentiment), and Singapore as the residual core. The sharpest signal in

the current scan is the Korea curve divergence – KRW NDIRS 10y at the very top of Vaninder Singh, CFA

Macro Strategist

the breaking list while KTB 5y has compressed to the 11th percentile – a gap that

+65-6423 8947

typically resolves and bears watching.

Sameer Goel

BI continues to prioritize FX through tight liquidity management despite MoF's Macro Strategist

recent move to redirect SAL into state banks. SRBI issuance remains large, with +65-642-36973

inflows strongly correlated with BI's short forward book. BI's reduction in repo Bryant Xu

operations also indicates its reluctance to inject excess liquidity. Strategist

+65-6423 5558

A possible reset on Korea fiscal deficit. Korea's stronger tax revenue outlook, Joey Chung

driven by the semiconductor and AI investment boom, could substantially improve Strategist

fiscal balances in 2027 despite higher government spending. Depending on how +65-6423 8298

the revenue windfall is used, net KTB issuance could fall sharply, creating a Chen Kan

supportive supply backdrop for bonds. We expect policymakers to prioritize deficit Macro Strategist

reduction, which would be positive for the KTB market and place downward +852-2203-6159

pressure on long-term yields.