- US Treasuries closed mildly firmer amid a lack of fresh drivers but medium tenor bonds were held by strong PPI numbers and longer tenor bonds saw limited gains amid $15 billion sale of 30-year papers. The auction garnered a bid-to-cover ratio of 2.19 times but below the 2.23 times at the previous 30-year auction held last month. High yield at the auction was 3.05% or up from 2.938% at month. Indirect bidders who include foreign central banks saw lower take-up of 59.1% of the amount sold (64.5 prior auction). In macro data, PPI for Apr rose 0.5% mom against 0.2% consensus and prior month’s deflationary number of -0.1%. The 0.5% PPI was the highest rise since Feb 2012 and increase was broad-based across the four segments in the index.
- Ringgit govvies were dealt mixed amid mild net selling pressure, tracking weaker overnight UST. Despite that, we noted bellies of the curve were well supported especially as IPI came out lower than expected. In the primary side, Bank Negara Malaysia announced auction for the new 10-year MGS (MGS maturing Nov’27), which comes with an issue size of RM3.0 billion for the public tender (another RM1.0 billion for private placement). WI was heard at 4.00/3.90%. As for macro data, industrial production grew by 4.6% yoy in Mar, lower than consensus +4.8% and February +4.7%.
- Bank Negara Malaysia MPC is today but we don’t see a movement in rates as yet.
- At the Thailand market, the bond curve remained stable for the tenors less than 3 years while the intermediate segment ( 5-12 years) edged higher by 1-2bps possibly due to speculation of a bond switching program (bonds maturing in 5 years and longer are expected to be the multiple destination bonds). Unlike local interest concentrating on the switching program, foreign investors looked to buy both short- and long-term bonds (+Bt283 million and Bt524 million, respectively).