- US Treasuries continued to pile on gains, recovering from some net selling pressure in the early trading session. Supporting interest in UST was release of disappointing personal spending data. Meantime, the ISM manufacturing index fell to a reading of 56.3 in Jul from 57.8 in Jun as well as just below consensus of 56.4. Core PCE rose 0.1% in Jun, meeting expectation (+0.1% in May). Personal spending was unchanged in Jun against +0.1% expectation.
- Malaysia: MYR sovereign papers were traded in a narrow range Tuesday. Trading activity was muted, with daily volume down to RM1.4 billion from RM2.0 billion a day prior. Bank Negara announced details new 20-year GII auction, with an issue size of RM2.5 billion. WI was quoted wide at 4.65-85%. On year-to-date basis, buying-on-dips often emerge where the existing 20-year GII (GII Oct’35) was traded >4.80%. On the other hand, 10x20 spread for GII was ranging between 61-63bps this year. Should 10-year GII hold firm around 4.06%, the 20-year GII could move towards 4.70%. While secondary trading appears to be relatively soft now, the auction may see relatively-weaker demand with higher target yield offering around 4.72-75%.
- Thailand: Yields were still traded in heavy tone in a bull-flattening mode as mid- and long tenors yield edged 2bps lower and shorter dated papers consolidated in lower and tight range of 1bp. Importantly, short-term T-Bill maturing up to 6 months continued to draw robust demand as the Baht is stronger after the report of healthy current account balance in Jun and report confirms low inflation. Thailand's headline CPI increased 0.17% yoy, less than the estimate of 0.30% and the BoT target band of 1.00%-4.00% because of lower food prices. Headline inflation declined to 0.13% mom in Jul mainly because of falling vegetable prices and declining fuel prices. Foreign investors substantially bought into short-term bonds at Bt23.6 billion followed by Bt713 million net buying of long-term bonds. Net buy position in Thai bond accounted for Bt24.31 billion, the highest net purchase position since Jun 7, 2016 and USD/THB was seen lower about 33.27. Low inflationary pressure and our observed market demand are likely to favor the auction of LB22DA, the new 5-year benchmark bond with 2.00% coupon, and we target price at 1.95%.
- Indonesia: Government bonds were traded firmer on the back of some buying actions, by local players. Benchmark series dominated the market, especially 5-year FR61 and 10-year FR59. Appetite for bonds was also somewhat reflected in the IDR Sharia bond auction, as the government received IDR14.9 trillion incoming bids, while it targeted to issue IDR6 trillion. The government upsized the issuance to IDR7.62 trillion, with 6-month SPNS bills and 2-year PBS13 accounted for 88% of issuance (77% from total incoming bids for those 2 series). Volume decreased a tad to IDR11.4 trillion and centered on bonds maturing in between 1 and 5 years (45%).