US Treasuries
- UST expected to be stable ahead of NFP. We think UST yields will be more stable this week as players wait for next big event, being release of September non-farm payrolls. Consensus estimates for NFP is a small +85k against +156k in August. We see 10T resistance at 2.40% in the short term period.
Malaysia
- Profit taking pressures. Start of 4Q17 may see profit taking pressures on MGS especially along the longer tenors. Hence, we stick to front and bellies of the curve.
- Stick to short tenures. Players don't expect current weak MYR as a sustained move – with players largely expecting a firm MYR in 4Q17. Our USD/MYR forecast for end-2017 is 4.2000. Reflecting MYR strength, implied volatility has remained low in two quarters as markets moved away from Trump's election and tax plans. We expect short to medium term 5y MGS support at 3.50%.
Thailand
- Upside bias on rates. Recent net selling positions had been concentrated on the front-ends net-sell position at Bt21.06billion last week – and baht had weakened towards 33.32 last Friday. All in, anticipated December Fed hike and low chance of a BoT rate cut are negative factors for front-end bonds - we maintain our upside bias on 1y THBIRS and govvies yield at 1.50%.
Indonesia
- Net selling pressure anticipated this week despite positives from low inflation. Weak inflation is positive for bonds, but we foresee net selling pressures this week to be driven by external catalysts, especially sustained Fed hawkish outlook and US fiscal developments. We expect 10y yield to increase towards 6.60% this week.
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