- US Treasuries consolidated in narrower ranges and yields moved a tad higher Monday, as sentiment turned guarded heading into major risk events– FOMC and BoJ meetings. Investors generally anticipate the Fed to hold rates unchanged, whilst Fed Funds futures trading implied a 20.0% probability of a 25bps hike at the upcoming FOMC meeting.
- We think Fed will not yet hike this month though there could still be one hike in 2016, probably in Dec. US GDP growth is expected at a less-than-robust 2.0% in 2016 (growth nearer the 1% over the last four quarters) whilst inflation is still below the FOMC target. We maintain that 10T above 1.72% will continue to attract sustained bargain hunting interest.
- Ringgit sovereign bonds remained under pressure, alongside the USD/MYR hovering at 4.1400 late Monday. Trading activities were also subdued, with daily volume totaling RM1.5 billion. Pending the CPI data release slated for 21 Sep, economists anticipate Aug inflation to grow at a faster pace of +1.3% yoy, compared to +1.1% yoy a month prior.
- Thai govvies ended with little changes early the week. Flows were pretty thin, as daily trading volume shrank drastically to Bt4.7 billion, from Bt15.6 billion garnered last Friday. Meantime, trading activities were slanted towards shorter dated papers namely ILB217A, LB226A and LB176A.
- Indonesian government bond market was very quiet on Monday and bonds were traded in tight ranges. Some light net buying flows were seen in the 10-year space, but weren't enough to spark a rally. Today MoF will be holding a Syariah bond auction with IDR4 trillion target issuance.