- US Treasuries moved in narrower ranges with yields marginally lower by Fed policymakers' remarks. St Louis Fed president James Bullard (non-voter) sees current level of policy rate "is likely to remain appropriate over the near term", citing soft inflationary pressures, even if the unemployment rate dips to 3.0% from current 4.3%. Minneapolis Fed president Neel Kashkari (FOMC voter this year) stated economic growth will be weighed by reducing immigration to the US.
- USD paced itself after strong showing post release of firm NFP jobs numbers. The greenback's limited upside overnight mainly reflected a cautious mood ahead of US inflation data this week. US PPI ex-food and energy is expected to show stronger +2.1% yoy pace in Jul against 1.9% the month before. CPI yoy is anticipated to show stronger 1.8% pace in Jul against 1.6% in Jun. Yet it seemed traders were wary after the recent USD strength and in case actual data miss expectations. USD/MYR was around 4.2825 after hovering in range 4.2785-4.2846 on Monday.
- Malaysia: MYR bond yields and swap rates were lifted just slightly higher on Monday, with sentiment clouded by strong NFP but general view is central banks are still some ways before faster pace of tightening. We're eyeing short term resistance for 10-year MGS at 4.05%.
- For the moment, ahead of increased primary supply of high grade (GGs and AAA) corporate bonds, we remain focused on AA names in select sectors, including the power sector. We think there's trading gain on offer along medium to longer tenor TBEI 30s to 32s if offered above 5.07%.
- Thailand: Thai govvies ended with losses in a bear-steepening move Monday following sell-off in UST after stellar NFP. Yield rose 1-3bps and back-ends around 18-20 year tenors were the worst performer with 3bps increase. Sell-off moderated in thin trading with outright trading contracted 30% to Bt69.16 billion and we do not expected sell-off will extend as players hesitate to sell amid remaining US political uncertainty and increasing geopolitical tension after the UN imposed sanction on N. Korea to restrict exports aiming to punish the country for launching two ballistic missile tests. Meanwhile, foreign investors were net-sellers of Thai bonds at Bt85 million as they sold 1.68 billion long-term bonds but bought short-ends at Bt1.59 billion. Demand wise, the auction of 30-year LB466A (current yield at 3.32%) is anticipated to be well-received by insurance companies and long-term investors.
- Indonesia: It was quiet on Monday in the IDR government bond market. Market was taking sideway positions and focused on this week's auction. We expect demand for the auction will remain solid, as we think BI has a room to ease given the low CPI data and stable Rupiah. The government also released foreign reserves data for July, which rose to $127.76 billion from previous month of $123.09 billion. Total volume fell to IDR7.5 trillion only and was more or less equally distributed across all maturities.