- US Treasuries were dealt firmer, reacting to the selling pressure in stock market, amid cautious sentiment ahead of the first debate between US presidential candidates. Meantime, new home sales recorded at 609k for the month of Aug, slightly above consensus estimate at 600k, but lower than 659k garnered in previous month.
- Ringgit government bonds were dealt mildly weaker on light volume seeing weak MYR and global crude price on Monday. In the coming week, there will be a lack of fresh market drivers for Ringgit and Ringgit bonds. Representatives of OPEC countries will hold an informal meeting on 26-28 Sep, in which they could discuss output levels (which could support prices going forward). On the local front, highlight is on the 20-year GII reopening auction, which we expect an issue size of RM2.0-2.5 billion. Amid the lack of fresh catalysts, we reckon that the improved sentiment post FOMC will attract demand for Ringgit bonds. We still see support for shorter tenor bonds as we expect players to shorten duration (in face of possible Bank Negara loosening later in the year). We maintain short-term 3-year MGS target at 2.82%.
- Thai government bonds continued to be supported, post last week’s FOMC, with foreign players being net buyers of a large Bt4.5 billion of Baht-denominated bonds on Monday. However, overall the market closed mixed, with papers with remaining maturity 7-10 years coming under net selling pressure. Overall, the market fluctuated within range of +/- 1 to 2bps throughout the day. Outright trading volume was more active at Bt13.1 billion versus Bt9.2 billion last Friday.
- The IndoGB market was very quiet Monday and in tight ranges ahead of this week’s bond auction. MoF will be holding bond auction with IDR12 trillion target, and demand could be moderate as market players may try to bid at higher yields in the auction. Market volume was steady amounting IDR14.7 trillion and dominated by bonds maturing 1-5 (40% of total flows) and 5-10 years (32%).