EM debt firm as market weighs potential for China-U.S. trade deal; Indonesia, Baidu on tap

By Rebecca Melvin

New York, Dec. 3 – Emerging market debt was firm on Monday as investors were cheered by an informal agreement by the presidents of China and the United States for a temporary cease fire on tariffs while further negotiations are conducted.

“Pretty strong day across the board,” a London-based market source said. “Under-performers seem to be higher-quality names with people looking to move down the credit curve given bullish sentiment.”

In weekend meetings between China president Xi Jinping and U.S. president Donald Trump, Trump agreed to postpone for 90 days implementation of further U.S. tariffs that had been scheduled to take effect on Jan. 1 while trade talks continued. On Monday, U.S. Treasury secretary Steven Mnuchin said there is an immediate focus on reducing auto tariffs.

Equities were higher on the news and U.S. Treasuries slipped, sending the yield on the benchmark 10-year note to 2.999%. Oil prices were also higher and the U.S. dollar was slightly lower against a basket of international currencies.

In the new issue market, the Republic of Indonesia announced it is selling U.S. dollar-denominated notes (Baa2/BBB-/BBB) in three tranches that are being registered with the Securities and Exchange Commission.

Also planning a deal is Baidu Inc. The Beijing-based web services company plans to price an add-on to its 4 3/8% notes due 2024, which originally priced last month.

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