A surprise trade truce between US and China had driven a recovery in global risk appetite and risky assets. In tandem with buoyancy in global equities, Asian credit spreads have also seen a broad-based tightening. Our DACS indices for China, Hong Kong, Korea, India and Indonesia have all narrowed by between 5-15bps after the announcement of a 90-day reduction in US-China tariffs (to a general 30% rate for the US and 10% rate for China), which signifies a de-escalation in US-China trade tensions. Given the relief rally in credit, our Asian aggregate DACS index is now only 5bps above its pre-"Liberation Day" level.

But the Asian credit recovery is not even across all countries and sectors. Indonesian USD credit has far outperformed regional peers, with our Indonesia DACS index having tightened by 15bps towards a 3-month low. Indonesian credit was helped by a recovery in the IDR, which has been a surprise beneficiary of a broader reallocation out of USD assets after Trump announced his reciprocal tariffs. Indonesia, being relatively less dependent on trade than Asian peers, could be seen as being more resilient to trade headwinds. One sector that had surprisingly outperformed is China real estate. The recovery of the RMB on the back of USD weakness post-tariffs had provided policy space for PBOC to enact a 10bps cut to its 7d reverse repo rate, which will help support home sales and lower developers' financing costs.

DBS Aggregate Credit Spread or DACS indices show the aggregate credit spread, weighted by market capitalization and modified duration, for Asian corporate USD-denominated straight bonds. The higher is the DACS, the higher is the additional yield that can be earned in credit, and the higher is the perception of credit risks in markets.

Our first visual shows the notional outstanding of bonds from five Asian economies that comprise the Asia ex-Japan (AXJ) DACS index. These five economies are China, Hong Kong, Korea, India and Indonesia.

The second visual shows the notional outstanding split into industry sectors for the aggregate AXJ DACS index, and DACS indices for each of the five economies. Individual economies can be selected via the dropdown.

Our last visual illustrates the DACS index readings over time for AXJ or an individual economy. It is also possible to drill into the constituent sectors of the DACS indices using the second dropdown. Such sectoral DACS indices are shown on an individual economy basis when data is sufficient, and on an aggregated AXJ basis when otherwise.