US Treasuries strengthened as markets opened on Monday on the back of flows for safe hav

Market Roundup

• US Treasuries strengthened as markets opened on Monday on the back of flows for safe haven assets post Italy’s referendum. However, yields moved higher in the later session, tracking higher crude oil prices. Brent crude closed higher at $54.94/bbl, the highest level since Aug 2015.
• Malaysian government bond market took a breather on the back of firmer US Treasuries late last week. On top of that, we think that sentiment improved as the new FX measures to enhance depth and liquidity were well received by players. Elsewhere, Bank Negara announced the 20-year GII reopening auction with an issue size of RM1.5 billion, smaller than RM2.0 billion we projected earlier. Secondary trading of 20-year GII was last dealt at 4.95% Monday.
• Overall it was a muted day for Indonesian govvies ahead of Tuesday’s bond auction. As a result of inactivity, bid-offer prices were wide at 50-75 cents in the market. After the break, bonds showed some signs of life on the short dated 5-year and below, and also 20-year FR72, where small buying flows were seen. MoF will be holding the last auction of the year, targeting to issue IDR 6.2 trillion in the auction to reach the 2016 budget target. The target amount is way less than their usual IDR10-12 trillion target. We expect incoming bids to be pretty high.