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Liquidity dries up as China heads out 

October 2, 2014
Daniel Stanton, Reuters

Asian markets were generally flat on low liquidity. Traders said the market was dead, with Hong Kong out for a public holiday for the next two days and China off for Golden Week.

"A lot of clients don't want to trade on a day with such low liquidity," said one trader. Investment-grade CDS was around 1bp-2bp tighter on minimal volumes, but high-yield was unchanged, which at least put a halt to the recent sell-off in that sector.

Another trader saw selling of Chinese corporate bonds and demand for Indian corporate paper from real money clients, but in small sizes.

Market participants will have to wait until Friday to see whether S&P's downgrade last night of half of the Basel III bank capital in Asia on new methodology has any impact on yields.

Read more: Reuters

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