US Treasury yields climbed in early session Wednesday, lifted by better-than-expected ADP

Market Roundup

• US Treasury yields climbed in early session Wednesday, lifted by better-than-expected ADP employment data for the month of Mar. This comes ahead of Friday’s NFP. The Mar ADP data registered 263k job gains, way higher than 185k projected by economists. NFP for Mar is expected at 180k compared 235k in Feb.
• UST was supported by the FOMC meeting minutes. Amongst others, the minutes showed discussion on potential reduction in Fed’s balance sheet. However, discussions apparently did not go far enough, which supported bonds. Policymakers were also concerned by the rise in equity prices over the past months. UST yields eventually dropped, reacting to the safe haven flows as stock prices dipped.
• Ringgit government bonds closed with little changes, though there was mild pressure amid heavy primary supplies of corporate bonds market. Malaysia’s trade data appeared to be impressive for the month of Feb, but did little impact to move the market. Exports and imports expanded by 26.5% and 27.7% respectively in Feb, above consensus 15.1% and 19.5% growth projected earlier. The trade numbers also translated to a higher trade surplus of RM8.71 billion, compared to RM4.74 billion registered in previous month. Meanwhile, WI for the new 20-year MGS was quoted at 4.75/65%.
• THB bond yields fluctuated but in a higher and tight range of 1-2bps in the intermediates and long-end as flows from local banks and asset management companies were balanced in terms of buying and selling. Thai govvies were in directionless trade while the market waited for key event by the end of this week as the FOMC minutes together with US employment report may provide additional evidence of rate hike path and US growth outlook. Foreign investors continued to buy both short- and long-term bonds, totaling of Bt1.72 billion when stripping off expired bond of Bt4.98 billion.
• Indonesian government bond market was traded a tad weaker on the belly to long end of the curve on the back of some profit taking action by banks. However good news received from Rating and Investment Information Inc that raises outlook on Indonesia’s sovereign credit rating from Stable to Positive, and strong support as bids emerged on all benchmark series, kept bond yields to stay at current levels until close. About 45% of traded bonds were those maturing in over 10 years.