- US Treasuries gained to bring 10T back below 2.25%. The market was strong early on as BoE held interest rates at 6-2 voting whilst largely lowering its outlook for 2017 GDP to +1.7% (from 1.9% prior). However, BoE said “monetary policy could need to be tightened by a somewhat greater extent,” than it previously expected. The central bank said it sees two hikes in the next three years, or one more than its prior expectation. UST was also supported ahead of Friday’s NFP. Consensus shows an increase of a slower +180k in Jul versus +222k in Jun.
- Malaysia: Government bonds were a tad firmer on late buying interest Thursday, in conjunction with the firm MYR. The RM2.5 billion new 20-year GII auction saw relatively soft demand, as bid-to-cover reached 1.784 times. Average yield was 4.755%, within a spread of 4.723-4.783%, and at the higher range of wide WI 4.85/65% quoted prior the tender close. Post auction, it traded between 4.74-4.78%, and ended wider at 4.78%. We reckon that it appears to be attractive at 4.78%, offering 67bps spread against the 10-year GII, in contrast to 61-63bps spread earlier this year. On Friday, economists are anticipating +18.3% and +19.8% yoy growth in exports and imports respectively for the month of Jun.
- Thailand: Bonds continued to gain especially along the mid- and back of the curve supported by demand from asset management companies as they launch new funds. Moreover, falling bond yield also caused a lower shift in THBIRS curve and the 5-year swap rate edged below 1.90% key level. Foreign investors continued to buy short-ends at Bt403 million and long-ends at Bt1.79 billion but demand for front-ends somewhat decreased as valuation looks rich and the Baht halted gains after failing to break below 33.25 technical support. We expect a relatively quiet trade on Friday and there is a chance that investors will unload bonds ahead of NFP.
- Indonesia: IndoGBs were traded in a tight range for the entire day although the tone remained positive, and market placed strong bids throughout the day. Some net buying activities were seen near closing hour especially on 10- and 20-year buckets. However, they were not sufficient to move the market. Market volume fell to IDR7.9 trillion only and dominated by bonds maturing over 10 years (39%) and 5 and 10 years (30%).