Latest, repeal of Obamacare was approved at the US House of Representatives, but now is headed to its biggest hurdle being passage through the Senate. As it were, we expect Republicans only hold a slim majority of 52-48 in the Senate. We expect little impact on market direction from this development for now.

Market Roundup

• US Treasuries weakened as players continued pricing in gradual Fed rate hike expectations, with next hike possible at the Jun FOMC. On the flipside, the dip in oil prices made little impact, but we reckon further declines may cap the upside to UST yields in the short term period. Brent crude oil was traded at $48.38/bbl versus $50.79/bbl a day prior.
• Next highlight will be the non-farm payrolls, where consensus sees job gains amounting to 190k in Apr. Meanwhile, economists are eyeing for an unemployment rate of 4.6%. Apart from that, we have the French presidential election scheduled for 7 May, though market generally anticipates Macron to claim victory.
• Latest, repeal of Obamacare was approved at the US House of Representatives, but now is headed to its biggest hurdle being passage through the Senate. As it were, we expect Republicans only hold a slim majority of 52-48 in the Senate. We expect little impact on market direction from this development for now.
• Ringgit sovereign bonds were under profit taking pressure in the morning session, reacting to the weaker MYR driven by anticipation of a Jun Fed hike, but eventually closed mixed on Thursday, as late buying support came in. Apart from that, the 30-year GII WI was quoted unchanged at 4.95%. We think that players may prefer to stay light on Friday, awaiting US non-farm payrolls (consensus +190k in Apr) as well as French presidential election result scheduled on 7 May.
• In Thailand, government bond yields were caught in a tight range of less than 1bp even after UST yield surged overnight with increasing chance of a Fed Funds rate hike in Jun after the conclusion of the FOMC meeting. Foreign investor slightly reduced position in long-term bond Thai bonds about Bt941 million and it yet had an impact on the curve. As the yield for 5-year tenor and lower reacted slightly higher at less than 1bp despite stronger case of a Jun hike, we anticipated pent-up selling demand may lift the yield higher in bear-flattening pattern. Upside in LB226A yield may be extended to 2.20%.
• IndoGBs were traded down post-FOMC rate decision and hawkish sounding Fed. Some net selling action was seen on the 20-year benchmark, while buyers provided support along the 7-10 year space. Position trimming might contribute to net selling action today with auction looming next week (to-be-auctioned series: 5-year FR61, 15-year FR74, and 20-year FR72). Transaction volume fell to IDR11.8 trillion. Of these 40% maturing between 1 and 5 years and 47% maturing in over 10 years.