US Treasury yield curve bear steepened, reacting to the surge in crude oil prices after the OPEC members agreed to cut daily production by 1.2 million barrels beginning Jan 20

Market Roundup

• US Treasury yield curve bear steepened, reacting to the surge in crude oil prices after the OPEC members agreed to cut daily production by 1.2 million barrels beginning Jan 2017. Brent crude rise substantially from $46.38/bbl to $50.47/bbl during mid-week. Economic data releases were generally positive. ADP employment reported job gains of 216k in Nov, above 170k projected earlier. Personal income grew by a larger margin of 0.6% in Oct (against consensus 0.4%), and personal spending expanded by 0.3% during the same period (lower than consensus 0.5%).
• Ringgit govvies closed firmer, amid decent flows on the final trading session of Nov. Ringgit bonds were well supported by net buying interest, ahead of the OPEC meeting scheduled on late Wednesday. We reckon that the supply cut deal agreed by OPEC members will aid oil prices and Ringgit bonds in the short term, if UST yields are capped near the recent highs.
• Thai sovereign bonds weakened during mid-week. Sentiment was weighed by the poor demand in LB466A auction, as the Bt13 billion tender saw a subdued bid-to-cover of 0.81 times. Average yield was 3.3271%, at the higher range between a wide spread of 3.2500-3.3500%.
• Indonesian govvies rallied on the back of buying flows from local investors and some foreign names. Demands, continued with thin supply on the benchmark series caused market to trade higher with ease. The movement is in line with lower overnight UST yields.