- US Treasuries recovered earlier losses on the back of buying-on-dips interest, alongside lower crude oil and stock prices. The 10T yield hit the fresh high at 1.75% during mid-week, but eventually settled lower around 1.70%.
- Ringgit govvies remained under pressure amid thinner liquidity during short week, alongside weaker Ringgit and crude oil ahead of FOMC meeting next week. The government sold RM3 billion worth of the 5-year MGS (MGS Nov’21) in a reopening auction. The auction received weak demand, in our opinion, as bid-to-cover ratio was just 1.67 times. This was despite average yield at the auction of 3.256% (within a narrow spread of 3.240-3.273%) which was higher than WI levels of 3.21/185% quoted a day before the tender closing.
- Thai govvies were dealt slightly weaker during mid-week. Elsewhere, foreign players recorded fifth consecutive net selling during mid-week, with heavier amount of Bt6.4 billion. The central bank held the policy rate at 1.50%, in line with market expectation. On top of that, BoT noted higher-than-expected growth in second quarter, underpinned by private consumption, public expenditure and tourism, but raised concerns on the strengthened THB which may not be beneficial to the economic recovery.
- Indonesian government bond yield curve went up again as Rupiah currency went to beyond 13,200 level, closed at 13,210 on Wednesday. Offshore banks seemed to be sellers, with locals provided defensive bids. Overall tone for this week may remain negative until there is a clearer direction from central banks globally. On the local side, there will be August trade balance data today, with market expecting trade surplus (survey at USD500 Mio). Market volume increased to IDR11.9 trillion and dominated by bonds maturing in over 10 years (57%) and bonds maturing between 1 and 5 years (21%).