The foreign bond markets vacillated and went mildly bullish in October, while the domestic bond market vacillated slightly downward in the month. At the beginning of the month as the financial market turmoil worsened, the U.S. treasury notes picked up momentum. Subsequently as governments around the world took actions to stabilize the financial markets and the investors worried that the new rescue plan would increase the issuance of government bonds, the yield rebounded with the yield of 10-year treasury notes closing at 3.62% on 10/22, off 20bp from the end of September. Domestically, despite of the favorable atmosphere of the bullish performance of the international bond markets and the turbulent financial markets worldwide, the yield of domestic government bonds only edged up slightly after some vacillation as dealers took a more cautious stance with the yield of the domestic bond already at a low level and market expectation of a sell-off of government bonds by some financial institutions strapped for cash. The yield of 10-year bonds closed at 2.06% on 10/22, up 4bp from the end of the September.

The 5-year, 10-year, and 20-year benchmark bond yield, and Taiwan government bond index was around 1.9704%, 1.9830%, 2.0825%, and 985.22 points at the end of October. The daily turnover in the bond market averaged NT$344.3 billion for the month. The daily average of outright trade amounted to NT$83.06 billion (24.12%) and that of RP/RS trade was NT$261.24 billion (75.88%). The market turnover fell 3.30% from September (the 5-year, 10-year, and 20-year benchmark bond yield, and Taiwan government bond index was around 2.0005%, 2.0231%, 2.1216%, and 980.12 points at the end of September, and the daily market turnover in the month averaged 373 billion; it amounted to NT$108.83 billion for outright trade and NT$264.17 billion for RP/RS trade).