Following the same approach as we adopted for the bond flow correlations, we first run panel regressions of all pairs of HD (or UD) bond return correlations for 10 (or 11) Asia-Pacific economies on the same global, regional and local factors as well as the seven tightening bond flow measures and 29 loosening measures taken by nine Asian economies over the past decade. Before we assess the effectiveness of bond inflow management measures, it TUG-770 should be noted that bond inflow management measures affect bond returns indirectly by changing the foreign demand for local currency bonds which in turn affects bond prices and exchange rates and thus US dollar-denominated returns. Therefore, biliary system is possible that an increase in bond flow correlation between two economies translates into an increase in bond return correlation between them, but there are also other factors, such as bond supply, affecting bond returns and thus their correlations. We first look at the results from regressions on the correlation and level of HD bond returns, and then those of UD bond returns.
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