Monday, February 6, 2017

US Treasury yields rose, pairing with rising stock prices, amid greater risk appetite after news reported President Trump will order a review on the Dodd-Frank Act. However, yields eventually corrected lower and ended little changed, upon NFP release. The Jan NFP

Market Roundup
  • US Treasury yields rose, pairing with rising stock prices, amid greater risk appetite after news reported President Trump will order a review on the Dodd-Frank Act. However, yields eventually corrected lower and ended little changed, upon NFP release. The Jan NFP registered total job gains of 227k, higher than 180k forecasted earlier, but the unemployment rate inched higher to 4.8% in Jan, from 4.7% a month prior, and average hourly earnings disappointed at +0.1% mom against +0.3 consensus.
  • MYR government bonds saw trimming of positions Friday ahead of US non-farm payrolls data. However, we expect net buying of MYR government bonds to continue. With offshore USD returns pared lower, MYR returns remain enticing   though 10-year MYR yields have come down to near 4.10% from above 4.50% in Dec, the spread between 10-year USD and 10-year MYR yields remain in excess of 160bps (versus 180bps end Dec 2016).
  • Thailand govvies fluctuated in a tight range of 1bp as the market waited for US NFP report while there was profit taking pressure on LB226A. US employment data continuing to hold up and cause a sell-off in Treasuries may add to net selling pressure on Thai bonds, in our opinion. Meanwhile, IRS rates were trapped in familiar range with the 5-year holding in 2.15%-2.25% range. Near term risk is MPC meeting on Feb 8.
  • Indonesian govvies traded up ahead of US NFP data. The most popular bonds remained the 5- and 10-year benchmark series, followed by short dated bonds with tenors less than 5 years. As has become the pattern for the past few days, the market opened quiet and activities picked up after the break; and tone was biddish until close, sending the yield curve down on 2-5bps across the curve. Volume was steady at IDR11.2 trillion.

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