- US Treasury yield curve ended bear flattened as players turned cautious ahead of FOMC meeting this week. On the flipside, Brent crude oil slipped and settled at $44.72/bbl on Monday, though we think the recent weakness in crude oil prices should provide support to the US Treasuries.
- We short UST this week, and expect 5-10bps bounce up in yields. Month-end we target the 10T at 1.64%, exit 1.46%.
- Ringgit government bonds saw a lack of support with FOMC and BoJ meetings on the way. There might be profit taking pressure on 5-year bonds with levels below 3.20%, but longer tenor papers may see some support on bargain hunting interest but only if there is a lack of more negative news.
- Thai government bonds weakened on Monday on foreign net selling though there was mild net buying interest on the far end of the curve (tenors longer than 10 years), as players awaited this week’s FOMC meeting. Papers with maturity less than 5 years saw heaviest flows.
- Indonesia government bonds were traded a tad weaker on the back of thin market. We saw foreign selling pressure along 10-year tenors while local names were bargain hunting on the longer part of the curve. Meanwhile, mild support emerged in the market particularly in the 2-3 year tenors. Sentiment suggests a tight range this week awaiting for catalysts for a rebound. Market volume increased to IDR9.7 trillion. The market was dominated by bonds maturing over 10 years (54%) and bonds maturing 1- 5 years (22%).