The international bond markets were bullish, while the domestic bond market vacillated in the month of August. As the sentiment towards the global economy turned pessimistic, the U.S. investors switched gradually to the bond market. Bolstered by the bullish news of falling oil prices which would help alleviate the inflation pressure, the U.S. bond market turned strong with the yield of 10-year U.S. treasury note closing at 3.84% on 8/19, down 14bp from the end of July. Domestically, the environment was mostly bullish for the bond market amid lax money supply, economic growth slowing down, dropping commodity prices, and the likely move of the Central Bank to hold interest rate hike. But as the yield of the government bond had hit its low at the end of the previous month, investors did not swarm to the bond market, whereas only the auction of new 20-year bond showed better-than-expected performance. The yield of 10-year bond closed at 2.53% on 8/19, up 3bp from the end of July.

The 5-year, 10-year, and 20-year benchmark bond yield, and Taiwan government bond index was around 2.3573%, 2.4988%, 2.5650%, and 957.16 points at the end of August. The daily turnover in the bond market averaged NT$346.76 billion for the month. The daily average of outright trade amounted to NT$102.13 billion (29.45%) and that of RP/RS trade was NT$244.62 billion (70.55%). The market turnover rose 4.60% from July (the daily market turnover in July averaged 316.45 billion; it amounted to NT$66.58 billion for outright trade and NT$249.87 billion for RP/RS trade).