Both the domestic and foreign bond markets fluctuated in the month of October. In the beginning of the month, spurred by the US FED’s comment that it plans to tighten money supply as the economic outlook improves, the yield of U.S. bonds rebounded with the yield on 10-year treasury note climbing to 3.39%. Subsequently the better-than-expected economic figures on retail sales and unemployment rate and the continuing improvement of corporate profits as reported by businesses pushed the Dow to break the 10000 mark and brought the yield on 10-year treasury note even higher to reach 3.46%, which then retreated a bit to close at 3.34% on 10/20, up 3bps from the end of previous month. Domestically, the yield on 10-year bond fell briefly to a historical low to 1.31% at the beginning of the month and then rebounded sharply by about 10bps under the Central Bank’s statement to rein in the appreciation of NTD. Subsequently as banks entered the market to absorb most of the chips, the yield gradually stabilized. The yield on 10-year bond closed at 1.43% on 10/30, up 3bps from the end of September.

The 5-year, 10-year, and 20-year benchmark bond yield, and Taiwan government bond index closed around 0.91%, 1.43%, 2.17%, and 1002.55 points on 9/30. The daily turnover in the bond market averaged NT$300.5 billion for the month of October. The daily average of outright trade amounted to NT$89.8 billion (30%) and that of RP/RS trade was NT$210.7 billion (70%). The market turnover increased by 4.45% from September (the daily market turnover in the month of September averaged 287.7 billion; it amounted to NT$88.6 billion for outright trade and NT$199.1 billion for RP/RS trade).