- US Treasuries further weakened ahead of last weekend, weighed by the anticipation of announcement of President Trump’s tax plan. However, selling activities eventually eased in the later session and saw the yields only edged higher by 1-2bps across the curve.
- USD strength extended momentum, aided by anticipation of President Trump’s tax plan in the near future. DXY index climbed higher to 100.80, the highest level since Trump’s inauguration on 20 Jan. EUR/USD headed lower to 1.0643 after a short pullback to around 1.0700 on Thursday.
- Malaysian sovereign bonds were dealt firmer on Friday, despite the rise in overnight UST yields. The central bank announced details for the auction of new 7-year GII. The planned auction size of RM4.0 billion meets market and our expectations. WI was last heard at 4.13% ahead of the weekend. On the other hand, industrial production grew 4.7% in Dec, stronger than the +4.0% projected earlier.
- Thai sovereign yield curve was in a bear-steepening mode as yields on the belly and the back of the curve increased by 2-5bps on Friday following the dynamic sell-off in US Treasuries which was damped by risk-on sentiment after Trump promised corporate tax proposals on Feb 9. Overall market activities leaned on net selling of longer than 1-year govvies and strong net buying interest in short-term bonds (less than 1-year tenor) from both local and foreign players. Profit taking pressure could come on LB26DA as the yield rose 5bps to 2.70%, reversing almost all of its weekly decline about 6bps.
- Indonesian govvies were traded in tight ranges on Friday, as previous day’s rally didn't continue as market’s watch-and-see stance on Trump's tax plan that caused 10-year US Treasury yield to go up from 2.33% to 2.41% overnight. Overall tone in government bond market was still positive, although some profit taking action was seen and market activities were much lower compared to Thursday, but overall market well supported, thanks to Moody's outlook upgrade effect. Market volume decreased to IDR11.5 trillion and was evenly dominated between different maturities.
We make correction to last Friday's Daily Commentary under the Fx markets segment on status of the rating outlook on Indonesia to:
- Elsewhere, IDR bucked trend of regional fx, as Moody’s upgrades Indonesia’s rating outlook to Positive.