Short-term Asian bonds could be more favorable due to ongoing uncertainty in US interest rates, Nomura said in a Wednesday research note.
Asian rates have shown less sensitivity to recent US rate increases, a pattern that may continue as the region's central banks pursue monetary easing due to growth risks linked with tariff uncertainty, Nomura said.
The equity research firm said it favors taking long positions in shorter-maturity Asian bonds, receiving positions in Indian instruments, and favoring curve steepeners in the Chinese market.
Meanwhile, long-term bonds in Thailand and Indonesia look to be vulnerable to the volatility, with narrow spreads between 10-year Asian bonds and US treasuries further exposing them to a renewed selloff in US long-term rates, Nomura said.
Overnight reports suggested US President Donald Trump would not remove Federal Reserve chairman Jerome Powell, but persistent doubts on the central bank's credibility could keep long-term US rate volatility high, the research firm said.
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