Wednesday, February 15, 2017

US Treasury yields were pushed higher by relatively hawkish comment made by Fed Chair Janet Yellen. During congressional testimony held on Tuesday, she signaled that it wo

Market Roundup
  • US Treasury yields were pushed higher by relatively hawkish comment made by Fed Chair Janet Yellen. During congressional testimony held on Tuesday, she signaled that it would be “unwise” to wait too long for rate hikes, due to the upticks in both inflation and wage growth under moderate economic expansion. Following Yellen’s comments, Fed Funds futures trading implied 34% probability of Fed to raise by 25bps in upcoming FOMC meeting scheduled on 15 Mar, compared to 30% recorded a day prior.
  • Malaysian sovereign bonds surprisingly closed a tad firmer despite the weaker UST early this week. Meanwhile, flows were heavier at RM4.3 billion, increased from RM2.8 billion registered on Monday. The new 7-year GII auction saw good demand, indicated by a bid-to-cover ratio of 3.12 times for a size of RM4.0 billion. Average yield was generated at 4.045%, within narrow range of 4.03-4.05%, and at the lower end of WI 4.12/02% quoted in previous day.
  • In Thai sovereign bond market, most bonds were traded in weaker tone and fluctuated in tight higher range of 1bp in tandem with US Treasuries after Trump promised tax stimulus plan in coming weeks. However, the yield in intermediate segment especially for LB21DA, LB226A, and LB22NA increased more than 1bp amid selloff from local player before the auction of 3-year GGLB197A and and 5-year GGLB21NA. Demand side said tomorrow's auction of LB316A may be absorbed at 3.4% from regular buyers such as local insurance and asset management company.
  • Indonesian government bonds market was traded down on auction day, somewhat to be expected with added supply. However market bid was strong, supporting the market until market closed. MoF targeted to issue IDR15 trillion in auction day, as expected auction demand was still solid, incoming bid reached IDR31.8 trillion and government upsized the issuance to IDR18.4 trillion. Market volume doubled to IDR11.8 trillion.

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