US Treasuries weakened especially on longer tenors (30T up 7bps to 3.10%) and the 2x10 spread widened out to 32bps after it had tightened to around 25bps recently. UST followed early loss in JGBs amid news Bank of Japan was mulling less accommodative monetary policy stance, to take more ‘sustainable’ measures to fight stubbornly low inflation into the medium to longer term. BoJ policy meeting is scheduled for next week. Meantime US existing home sales fell 0.6% mom in Jun to 5.38m versus downward revised 5.41m sales the month before.
Indonesia’s government bonds were supported Monday by local buying interest. Gains were mostly seen for the day though there were still some foreign net selling activities. The market was more active in the morning session, but mainly drifted in afternoon with prices mostly lower. Market volume fell to IDR13.8t whilst trade concentration stayed at the belly and the tail end of the curve.
Malaysian government bonds saw mostly gains on Monday which were found across the curve but flows remained relatively thin. Gains were seen especially along GIIs and government guaranteed (GG) bonds. We think demand from recent rally in benchmark MGS is being felt in the GII segment recently (and also on non-benchmark MGS segment) as there had been a lack of new GG papers to feed the demand for yield pickup.
CIMB Treasury & Markets Research-Fixed Income
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