- US Treasuries moved in narrow ranges and closed little changed ahead of the weekend. Players appear to be waiting for new catalysts this week – full fiscal 2018 budget announcement (23 May), Fed minutes release (24 May) and OPEC meeting (25 May). Apart from key risk events, players are also expecting primary offerings, which include 2T ($26 billion), 5T ($34 billion), 7T ($28 billion).
- Malaysia: Sentiment improved on the back of recovery in global stock markets, and aided by strong 1Q2017 GDP data. The 1Q2017 growth was encouraging at +5.6% yoy (consensus +4.8% and previous quarter’s +4.5% yoy), underpinned by strong domestic demand. Private sector consumption rose 6.6% yoy (versus 5.2% in 1Q2016) and private investment rose 12.9% yoy (+2.1% in 1Q2016). The improved sentiment should aid Ringgit govvies in the short term, alongside anticipated announcement of prolonged supply cuts by OPEC members at their 25 May meeting.
- Thailand: The bond curve moved higher 1-2bps as players booked profits before the MPC decision on May 24. Pressure was felt in 10-year LB26DA and 15-year LB316A after a rally earlier in the week after firm demand at auction of LB316. The central bank is likely to keep interest rates unchanged at 1.50% due to containing inflation risk, moderate Thailand growth outlook, and the wait of FOMC rate decision in Jun. Meanwhile, the MPC statement may have a directional impact towards higher USD/THB and lower local interest rates if the policymakers express a dovish surprise.
- Indonesia: IndoGBs opened lower to start the day in line with weaker IDR that reached 13400. However, tone changed dramatically after S&P upgraded Indonesia’s rating to BBB- investment grade. Market was biddish with the curve bull flattening as players frantically chased any bonds on belly to long end of the curve, sending yields on those tenors lower by 20-25bps. Volume leaped to IDR19.8 trillion.