Bond Market

In the U.S. bond market, the U.S. July manufacturing purchasing managers index (PMI) reported on August 1st by the Institute for Supply Management (ISM) decreased to 48.0, which was lower than the consensus of 49.5 and the level of June of 49.0. According to the non-farm payroll employment and unemployment data released by the U.S. Labor Department on August 1st, non-farm jobs increased by 73,000 in July, lower than the consensus of 105,000. And the job count for the prior two months have revised downward by 258,000; The unemployment rate in July was 4.2%, slightly higher than the percentage (4.1%) in the previous month, echoing with market expectations. The July Consumer Price Index (CPI) published by the Bureau of Labor Statistics on August 12th increased 2.7% year-over-year, which did not change from the growth level of the month earlier, and not much lower than the consensus of 2.8%. The annual core CPI growth rate for July reached 3.1% from 2.9% in June, surpassing the market expectations of 3.0%. On August 22rd, Fed Chairman Jerome Powell showed prudent willingness to a September rate cut during the annual Jackson Hole Symposium, as a probable response to the weakening labor market since the last decision-making meeting in July. Following Powell's comment, investors increased their bets on a rate cut in the near future at the September FOMC meeting. The U.S. Treasury yields trended upward in August, mainly due to economic data more sanguine than expectation and inflation picking up. As of August 31st, the 10-year Treasury yield closed at 4.228%, down 14.6 basis points from the level (4.374%) at the end of July.

As for Euro bond market, market research firm S&P Global reported on August 1st that the preliminary Eurozone manufacturing PMI for July was 49.8, in line with market expectation and comparable to the level of the previous month, but failed to reach the distinguishing level of 50. The initial value of the Euro area CPI growth for July published by Eurostat on August 1st stayed flat at 2.0% year-on-year for another month, higher than the widely expected increase of 1.9%. Compared to the year-on-year percentage last month, the core CPI also stayed the same at 2.3%, in line with the consensus. There wasn’t any interest rate decision meeting for the European Central Bank (ECB) in August. At the annual Jackson Hole meeting, ECB President Christine Lagarde pointed out that, despite once-in-a-decade higher inflations and aggressive rate hikes in recent years, Europe's labor market has shown resilience, with employment growth reaching 4.1% from the end of 2021 to mid-2025, staying pretty close to the growth rate of the economy itself. She believed this was due to the recovered conditions of global supply chains, falling energy prices and proactive fiscal policies, and stressed that inflation had fallen significantly at the cost of minimal employment impact. After several rounds of interest rate cuts, the European Central Bank currently maintains the deposit rate at 2% and suggests that monetary policy is gradually approaching the final stage of the intervention. The yields of major European government bonds rose in August as the ECB suspended rate cuts and the market expected limited easing ahead. In addition, uncertainties such as heavier military budget by European countries may also encourage government bond issuance. The yields of Germany, French and Italian 10-year government bonds as of August 31st closed at 2.724%, 3.512% and 3.587% respectively, moving up by 2.9bps, 16.3bps and 7.8bps from the end of July.

Domestically, the July economic indicators published by the National Development Council on August 28th, showed that the July economic composite score was 29 points, unchanged from previous month, and the economic monitoring indicator continued to flash green. According to the July import/export data published by the Ministry of Finance on August 8th, the monthly exports amounted to US$56.68 billion, up 42.0% compared to that of the same period last year (an increase of 27.5% in NTD terms). The yield on 10-year Taiwanese government bond as of August 31st closed at 1.390%, increasing 1.3bp from the end of July, reflecting expectations concerning higher public debt.

The 5-year and 10-year benchmark Taiwanese bond yield closed at 1.290% and 1.390%, respectively, as of August 31st, 2025 (as compared to 1.305% and 1.377% at the end of July). The daily turnover in the NTD bond market averaged NT$121.46 billion for the month of August 2025. The daily average of outright trade amounted to NT$14.175 billion (11.67%) and that of RP/RS trade was NT$107.284 billion (88.33%). The daily average of market turnover decreased 5.66% as compared to that in July (the daily market turnover in the month of July averaged NT$128.747 billion; it amounted to NT$13.948 billion (10.83%) for outright trade and NT$114.799 billion (89.17%) for RP/RS trade). In the foreign-currency bond market, the daily turnover of International Bonds and registered foreign bonds averaged NT$46.493 billion for the month of August 2025; it amounted to NT$13.365 billion (28.75%) for outright trade and NT$33.128 billion (71.25%) for RP/RS trade. The market turnover increased 23.57% as compared to that in July 2025 (the daily market turnover in the month of July averaged NT$37.624 billion; it amounted to NT$10.278 billion (27.32%) for outright trade and NT$27.346 billion (72.68%) for RP/RS trade).

Major stock exchanges in the world, such as Stockholm Stock Exchange, London Stock Exchange, Luxembourg Stock Exchange, Euronext, Korea Exchange, Hong Kong Exchange, and Singapore Exchange have set up a special board for the trading of sustainable bond, economic, social, and governance (ESG) bond or socially responsible investment (SRI) bond. In a move to promote Taiwan's sustainable finance, continue to keep abreast of international markets and enhance the international visibility of our capital market, and in support of the Corporate Governance 3.0 – Sustainable Development Roadmap, Green Finance Action Plan 3.0 as well as Capital Market Roadmap 2021–2023 promoted by the competent authorities, Taipei Exchange (TPEx), in reference of international trends, integrated the green bond listing and trading mechanism, social bond listing and trading mechanism, and sustainability bond listing and trading mechanism into the sustainable bond listing and trading mechanism and has set up a Sustainable Bond Board. On top of the capital bonds dedicated to sustainable developments, in order to assist enterprises achieve their overall strategic sustainable development goals, work toward net zero emissions and sustainable transformations, as well as to expand the range of sustainable bonds offered in Taiwan, the TPEx has promulgated the Sustainability-Linked Bond (SLB) trading system on July 8, 2022 so as to offer even more diversified sustainable fund-raising and investment tools, as well as to keep abreast of international markets for issuers and investors at home and abroad.