The resilience of Asia bonds in the last two weeks, as US Treasuries yields corrected higher, is notable in certain markets. In part this is driven by expectations that central bank policy can anchor local rates at low levels. We, however, take a more selective approach with many regional central banks pausing policy easing and some even vulnerable to implied tightening. If we group regional central banks by their willingness to ease, RBNZ and RBA would top the list. We still like receiving NZD-USD1yr1yr IRS spread and buying 4yr ACGB. Then we have a group of central banks that are in no rush to ease, but clearly have room to do so. Mainland China, Malaysia and the Philippines would fall into this group. We favour buying 30yr CGB, 10yr MGS and 5yr RPGBs. Particularly for mainland China and Malaysia, the policy decision to preserve monetary policy room has led to high real rates, which has led to decent total returns on local bonds in recent months. Finally, there are central banks that may be

constrained in their ability to ease for varying reasons. Korea and Thailand are near the zero bound on their policy rates and have so far been reluctant to attempt unconventional policy on a large scale. These two countries differ slightly, though, in that the Bank of Thailand has signalled a preference to use the remaining policy scope at the ‘appropriate and most effective time’. We therefore favour taking more duration risk in Thailand through 10yr ThaiGBs while sticking to receiving front-end rates via KRW1yr1yr NDIRS for Korea. Indonesia and in particular India are also constrained in their easing paths, the latter by inflation uncertainty and the former by external uncertainties. We still like paying 5yr INR NDOIS and have no IndoGB preference at this stage.