Emerging East Asian Local Currency Bond Markets: A Regional Update
Issue: September 2025
Financial conditions in emerging East Asia improved between 2 June and 29 August 2025 amid continued monetary easing and progress on trade deals with the United States in several regional economies, according to the Asia Bond Monitor September 2025 issue. Expectations of a Federal Reserve policy rate cut in September further boosted investor sentiment. In most regional markets, government bond yields declined, risk premiums narrowed, equity markets gained, and net equity portfolio inflows were recorded. Currencies remained stable amid uncertainties. Supported by improved financial conditions, local currency bond issuance in the region rose to USD3.1 trillion in the second quarter, with the size of the emerging East Asian local currency bond market reaching USD28.6 trillion at the end of June. Sustainable bond issuance rose to USD79.6 billion in ASEAN+3 markets during the quarter, resulting in total sustainable bonds outstanding of USD955.3 billion. This edition features a special section on how sovereign sustainable bond issuances help to improve liquidity and reduce yield spreads in corporate sustainable bond markets.