Ringgit sovereign bonds pared earlier gains amid profit taking pressure, after the central bank governor Datuk Muhammad Ibrahim denied the anticipation of series of rate cuts.

Market Roundup

• US Treasury yields edged higher on the back of risk on sentiment, with firmer crude oil and stock prices on Friday. Apart from that, US Treasuries were initially pressured by the positive retail sales in Jun (+0.6% MoM vs consensus +0.1% MoM), but losses were mostly recovered along with the release of softer-than-expected Jun CPI (+0.2% MoM vs consensus +0.3% MoM).
• Ringgit sovereign bonds pared earlier gains amid profit taking pressure, after the central bank governor Datuk Muhammad Ibrahim denied the anticipation of series of rate cuts. Despite that, we saw that sentiment remained well supported particularly on the longer dated papers, tracking the gains on the shorter dated papers.
• Thai government bonds further weakened amid profit taking pressure ahead of long weekend. On top of that, bond market saw thinner flows amounting Bt13.3 billion, in contrast to Bt31.6 billion garnered on Thursday, whilst trading activities were led by LB206A and LB21DA.
• Indonesian government bonds were traded in tight range again on Friday, whilst money market-tenured papers remained favorites for offshore banks, although overall volume appeared to be relatively thin. The market reacted positively following better-than-expected Jun trade surplus data (+$900 million vs +$212 million expected, May +$376 million). Most of the trades were on short dated bonds up to 5 year tenors. Market volume was steady amounting IDR 10.4 trillion and dominated by bond maturing in over 10 years (40%) and the rest was evenly divided by bonds maturing in 1 year, 1 – 5 year and 5 – 10 year maturities.