US Treasuries posted small gains as markets await Fed chief's testimony to Congress. Meantime, there was some support after new home sales surprised on the downside (-7.8% mom in January versus +3.5% consensus). Data on tap include 4Q17 GDP and PCE, and ISM manufacturing. There is support for the market down to 2.80%, whilst downside there's signal for resistance around 3.03%. We're also eyeing a flattish yield curve, expecting 2x10 spread averaging 65bps throughout the week.
MYR sovereign bonds mildly strengthened with activities focused on the bellies to long end of the curve. Flows remained muted as players wait for the CPI print, where consensus is eyeing for +2.9% for the January. On top of that, the improved sentiment (following UST recovery) sent the 10y MGS WI lower to 4.055/05% from 4.08/07% last Friday.
Thai govvies ield declined 1-2bps on the intermediates and long-ends as UST curve flattened. Flatter THB curve was supported by foreign purchases of long-term bonds and we view the current bond bidding environment is positive for LB22DA auction on Wednesday. Later this week, CPI is expected to remain slow in February (market estimates moderating headline CPI at 0.70% and core CPI at 0.60% yoy in February).
IndoGBs were traded firmer Monday from the opening, with buyers eager to bid in selected series especially 10y FR64, bringing the 10y yield down 5bps. However, longer tenors rose as much as 4bps (on 20y benchmark). Volume was thin aside from those buying actions. There will be a bond auction to be conducted today, where MoF will look to issue IDR17t on 5y, 15y, 20y benchmark bonds and 3m & 12m SPN bills. Expect demand to be concentrated more on shorter dated bonds. Volume leapt to IDR25.2t while trade concentration stayed at the tail end of the curve.
Asian dollar credits extended gains, tracking the recovery in UST late last week. Primary space saw active flows on Monday. Central China Real Estate's 3y bond was heard pricing at 6.50-6.625%. Apart from that, there were also multi-tranches issuance from Mitsubishi UFJ Financial Group and ICBC Dubai.
CIMB Treasury & Markets Research-Fixed Income
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