Thursday, April 13, 2017

US Treasuries were hovering in recent lower ranges, before the yields declined across the curve, weighed by President Trump’s statement. He pointed that USD is getting too strong and preferred low interest policy during an interview with WSJ, causing the DXY index and UST yields fell sharply late Wednesday.

Market Roundup
  • US Treasuries were hovering in recent lower ranges, before the yields declined across the curve, weighed by President Trump’s statement. He pointed that USD is getting too strong and preferred low interest policy during an interview with WSJ, causing the DXY index and UST yields fell sharply late Wednesday.
  • The greenback suffered losses after Trump stated the USD appeared to be too strong and that the preferred a low interest policy. USD/JPY moved in narrower range before it dipped below 109.00 for the first time since Nov 2016. EUR/USD rose to 1.0664 from 1.0605 a day prior.
  • Ringgit govvies closed mixed, with flows remaining thin Wednesday. Overall, sentiment was aided by flows into bond markets amid geopolitical tensions, but secondary trading continued to be pressured by heavy primary issuances in the corporate bond market. Elsewhere, WI for the 5-year GII was heard at 3.97/96%. Auction closes today, amount is RM4.0 billion.
  • As increasing geopolitical tensions around Syria and North Korea prompted market repositioning in a bearish tone, Thai bonds rallied from demand for safety and the LB curve shifted lower 1-2bps in the mid- and back-end. The Bt13 billion auction of 30-year LB466A saw solid demand at 1.84 bid-to-cover ratio, the highest in the last three auctions and 3.45% average bidding yield which was 6bps lower than yesterday's close.  Foreign investors continued to buy long-term bonds at Bt362million on Wednesday while they sold short-end bond at Bt1.785billion. Looking ahead, we see a possibility that foreign players will shift from Korean to Thai bonds as the 5-year CDS of South Korea surged to 57.42, higher than that of Thailand due.
  • Indonesian government yield curve steepened as players looked to shorten duration, moving away from 15- to 20-year bonds and into short end up to 5 years. This was in response to risk-off sentiment on geopolitical concerns. Market activities were still decent in the AM session. However after the lunch break, activities stalled and was relatively quiet rest of the day. Volume was IDR14.4 trillion and mostly consisted of bonds maturing in over 10 years (46%).

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