US Treasuries moved sideways before ending lower following remarks made by several Fed

Market Roundup

• US Treasuries moved sideways before ending lower following remarks made by several Fed members on Friday. The New York Fed president William Dudley revealed his optimism that the inflation target will be met in next few years. On the other hand, St Louis Fed president James Bullard voiced his support for a Dec rate hike.
• We see some pressure on UST amid ahead of upcoming supplies from the auctions this week, which comprise 2T ($26 billion), 5T ($34 billion) and 7T ($28 billion).
• USD further strengthened across the board, supported by recent rate hike remarks by Fed members. EUR/USD edged lower, reacting to a dovish comment from ECB chief Mario Draghi, who signaled for potential further stimulus measures in order to boost the economic recovery. EUR/USD closed at 1.0588 on Friday. DXY touched high of 101.48 last Friday before now hovering around 101.17.
• Ringgit sovereign bonds were under selling pressure amid the weaker Ringgit heading into weekend. Trading volume was heavy totaling RM7.4 billion, where we suspect was mainly driven by net foreign selling activities. In our opinion, Ringgit govvies seem to offer value following recent slump, particularly on the front end of the curve especially if the central bank remains dovish.
• Thai government bonds posted losses on Friday, as sentiment continued to be weighed by sustained weakness in UST and THB. Daily volume was heavier at Bt13.2 billion, in contrast to Bt9.4 billion a day prior, while flows were led by short dated LB196A and LB176A. Meantime, USD/THB edged higher and settled at 35.57 ahead of weekend.
• Indonesian govvies were traded lower on Friday, affected by higher US Treasury yields. Net selling pressure was especially seen in 2-5 year buckets. Although selected series in 15- and 20-year tenors still have buyers with certain targeted yield, market generally remains on net selling mode.