Asian banks safe but investors remain nervous

MoodyÆs says the US sub-prime exposure of Asian banks is limited. Nonetheless, investor nervousness causes one high-yield bond issue to be postponed.

Asian bonds dropped steeply again yesterday, as risk aversion spiked due to more fears about the US sub-prime crisis. This follows weak US labour data on Friday and more mortgage-related rating actions that spurred a sharp rally in US Treasuries. According to a BNP Paribas report released Monday, the yield curve steepened 8bp on the day to 27bp as the futures market priced in higher odds of a Fed rate cut.

Today, the US Federal Reserve will announce its assessment...

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