- US Treasury yields dipped across the curve on Friday, reacting to the softer-than-expected 2Q2016 US GDP growth (+1.2% against consensus +2.6%). The 10T yield fell from the intraday-high at 1.56% and closed lower at 1.45%.
- Incoming week should mean cautious tone for UST market with various macro data on tap. These include ISM figures, personal income and spending as well as closely watched Jul non-farm payrolls. Consensus for Jul payrolls is +175k against +287k in Jun. In lieu of macro data, resistance for 10T appears at 1.58%.
- Ringgit govvies were dealt firmer, as sentiment stabilized after the status quo FOMC outcome. Short term period we see decent demand for Ringgit govvies, led by speculation of further easing by central bank later the year. However, yield downside for longer tenor papers looks limited. Yet, we firm support for 3-year MGS at 2.82%. Upcoming highlight will be the Jun trade numbers to be reported on 5 Aug. Economists forecast exports to show a contraction of 4.1%, whilst imports to decline by 0.5%.
- Thai government bonds closed little changed amid light trading interest on Friday. Post an uneventful FOMC, we think the shorter tenor bonds may be in better demand, amid a lack of fresh supplies for the month of Aug.
- Indonesian government bond market opened on a biddish tone on Friday, as both local and foreign names were seen with strong buying interests. All benchmark series strengthened as well as shorter dated 2- to 3-year bonds, sending yield curve down by 5-7bps. Activities slowed down a tad in the afternoon session but in general market was still biddish until closing. Coming week's bond auction will serve as an indicator of to gauge the buying interest on Indonesian govvies. Market volume increased to IDR12.7 trillion and was dominated by bonds maturing in over 10 years (51%) and bonds maturing between 1 and 5 years (24%).