- US Treasuries weakened alongside a rebound in stock markets Thursday. Risk-off sentiment eased as polls see centrist candidate Emmanuel Macron marginally leading in the French presidential election. As for macro data, initial jobless claims was recorded at 244k as for the week ended 15 Apr, higher than consensus 240k and prior week’s 234k.
- Aside, Dallas Fed President Robert Kaplan, stated that three rate hikes is “still a good baseline”, but subject to economic growth. Also, he added the central bank should begin unwinding its balance sheet “as soon as later this year or maybe early next year”. This was a clearer picture on the winding down of the Fed’s balance sheet than what we’ve been getting before, and contributing the mild weakness in UST.
- Initial weakness turned into strength on the back of MYR demand and USD weakness resulting in USD/MYR breaking below 4.4000 repeatedly and closing below that level for the first time since November.
- Ringgit sovereign bonds hovered near prior levels, as market saw little reaction to the higher inflation data (+5.1% yoy in Mar vs consensus +5.2% yoy) released the previous day. However, we heard some offshore players were looking at the bellies of the MGS yield curve. As it were, USD/MYR dipped below 4.4000 Thursday. Market continued to see muted trading interest ahead of the French election slated for 23 Apr). Meantime, upcoming data on tap will be foreign reserves as at 14 Apr.
- Bond trading activities in Thai govvies were relatively quiet after the auction of 5-year LB226A on Wednesday. As profit taking flows were seen after solid gains in the auction, 5- and 6-year yields inched higher by 2-3bps. Meanwhile, other tenors fluctuated in a narrow range of 1bp due to the lack of market catalysts. Foreign investors were net sellers of both short- and long-term bonds at Bt1.14 billion and Bt470 million, respectively.
- IDR government bonds weakened following the Jakarta governor election that was won by the opposition. However, the market showed strong bids at current levels until close. The BI meeting was still in progress as the bond market trading was in its final hour before closing. Later, BI said it has maintained the 7d repo rate at 4.75%, as widely expected. BI official for economic and monetary policy Dody Budy Waluyo said the policy stance remains ‘biased towards neutral’ but is ready to raise rates if necessary. The current level of the policy rate is sufficient to keep within the target 3-5% inflation.