US Treasuries recovered earlier losses, supported by buying-on-dips amid a lack of economic

Market Roundup

• US Treasuries recovered earlier losses, supported by buying-on-dips amid a lack of economic data releases and dovish comments by BoJ governor Kuroda over the weekend. We think the market may continue to feel pressure as players are looking for fresh clues on Fed stance from the Jackson Hole conference, pairing with primary supplies totalling $88 billion this week. In any case, Fed vice chair Stanley Fischer sounded hawkish in his remarks in Aspen, Co, saying that the labor market is ‘remarkably resilient’.
• Malaysian sovereign bonds closed mixed, amid heavier daily volume totalling RM3.4 billion on Monday. We wait the details for reopening of the 10-year MGS with an expected size of RM3.5 billion and the Jul CPI data (consensus +1.1% yoy versus +1.6% in Jun). Assuming inflation remains weak, we maintain our short term target for the 10-year benchmark at 3.42%.
• Thai government bonds weakened early in the week amid a lack of fresh catalysts. Meantime, daily volume shrank from Bt11.2 billion to Bt8.9 billion on Monday. We maintain short- to medium-term target for the 10-year benchmark at 2.05%, with support from bargain-hunting interest and players shortening duration.
• Indonesian government bonds were traded lower in price Monday in line with the weaker Rupiah. Offshore banks were seen behind the net selling action, and local players were seen on the bid side. However, bids were not strong, pushing yields 8-12bps higher across the curve. MoF will be holding Syariah bond auction tomorrow with IDR4 trillion target. We think the auction demand will mostly come from local players, where they might try to bid at higher yields. Market volume halved to IDR8.5 trillion and was dominated by bonds maturing in over 10 years (40%) and between maturities of less than a year and 10 years (53%).