· US Treasuries posted losses last Friday in conjunction with gains in the stock market. DJIA reversed losses a day prior, and edged higher to 18571, but was lower than the peak of 18622 reached during mid-week.
- The ECB meeting turned out to be a non-event, as it maintained its policy stance as widely expected. UST yields appear to be directionless, but are biased to the upside ahead of FOMC meeting this week, in our opinion.
- Ringgit government bonds closed in mixed direction amid relatively thin flows totalling RM2.5 billion. We expect flows to be thin heading towards FOMC meeting this week, with possible profit taking pressure.
- Thai govvies ended pretty much unchanged on Friday, after showing weaknesses in the past few trading sessions. Upcoming highlight will be on the Bt16 billion LB316A auction slated for 27 Jul, which may pressure the long dated bonds in the short term period.
- Indonesian government bond market barely moved following BI decision to leave the benchmark rate unchanged. Persistent bids especially by local players were seen across all benchmark series. However volume appeared to be thin and bonds were traded in tight range for the whole day. Market volume decreased to IDR9 trillion on Friday and was dominated by bonds maturing in over 10 years (57%) and bonds maturing between 1 and 5 years (28%).