The People's Republic of China (PRC) raised its policy rates to curb inflation for the third time this year—by 25 basis points (bps) each—to 3.5% for the 1-year deposit rate and 6.56% for the 1-year lending rate, effective 7 July. Meanwhile, Bank Negara Malaysia kept its policy rate at 3.0% but hiked its statutory reserve requirement ratio by 100 bps to 4.0%, effective 16 July. Viet Nam slashed its repurchase rate by 100 bps to 14.0% effective 4 July, after a series of rate hikes earlier this year.

* PRC's consumer price inflation accelerated to 6.4% year-on-year (y-o-y) in June – the highest recorded – on the back of rising food prices. Consumer price inflation in the Philippines surged to 4.6% y-o-y in June, the highest level in 26 months, driven by price increases in water, electricity, gas and oil, food products, and education fees. In the Republic of Korea, growth in producer price inflation was constant at 6.2% y-o-y in both May and June.

* Net foreign investments in the Republic of Korea's local currency (LCY) bonds stood at KRW2.2 trillion in June, as net bond purchases for the month widened to KRW8.5 trillion, which eclipsed maturity redemptions of KRW6.4 trillion. However, net foreign investment in Korean LCY bonds was down in June from KRW2.6 trillion in May. 

* Thailand's Public Debt Management Office has approved five foreign banks to issue THB-denominated bonds up until 31 December. First Gulf Joint Stock Company plans to issue its debut bond worth THB6 billion, while Credit Agricole Corporate and Investment Bank, ING Bank, and Export–Import Bank of Korea were granted permission to issue THB10 billion each. Meanwhile, Lloyds TSB Bank was given approval to issue bonds up to a total of THB6 billion.

* The PRC's exports grew 17.9% y-o-y in June, from 19.4% in May while import growth slowed to 19.3% y-o-y in June, from 28.4% in May. Trade surplus grew to a 7-month high in June at USD22.3 billion. Malaysia's export growth eased to 5.4% y-o-y and imports rose 5.6 % in May. In the first 5 months of the year, total exports increased 6.2% y-o-y to MYR279.2 billion and total imports rose 10.3% to MYR228.0 billion. As a result, Malaysia's trade surplus in January–May stood at MYR51.3 billion.

* Last week, Shanghai International Port issued CNH3 billion of 5-year callable bonds to yield 5.05%. Indonesia's Bank Sumut sold IDR600 billion of 5-year bonds with a coupon of 10.125% and IDR400 billion of 7-year subordinated bonds with a coupon of 11.35%. Korea Hydro and Nuclear Power Co. sold USD500 million of 10-year bonds. Korea Gas priced a JPY30 billon samurai bond. Korea Land & Housing Corp. issued KRW250 billion of 3.5-year bonds at a coupon of 4.27%. Hyundai Merchant Marine raised KRW240 billion from the sale of 5-year bonds at a 5.8% coupon. Thailand issued THB40 billion of 10-year inflation-linked bonds at a coupon of 1.2%. Asian Property Development issued THB1.5 billion of 3.5-year senior notes that carry a step-up coupon of 4.5% in the third year and 5.8% in the fourth year.

* Government bond yields fell last week for all tenors in Indonesia and for most tenors in the PRC, the Philippines, Singapore and Viet Nam. Yields rose for all tenors in Hong Kong, China and for most tenors in the Republic of Korea, Malaysia and Thailand. Yield spreads between 2- and 10- maturities widened in the PRC; Hong Kong, China; the Philippines; Thailand; and Viet Nam, while spreads narrowed in the rest of East Asian markets.