Market Roundup
- US Treasuries reversed gains, led by the 0.3% increase in April core inflation, which was the highest since January 2013. Meantime, headline inflation inched higher by 0.1%, as the uptick was capped by 1.3% drop in energy prices. On Friday, the Fed chief Janet Yellen mentioned that "it will be appropriate for raising the Fed Fund Rate target this year, if the economy continues to improve as expected.
- Ringgit government saw heavier transaction amounting RM2 billion, increased from RM1.3 billion registered on Thursday. Trading activities were dominated by MGS Jul’16, which closed 4bps lower at 2.99%. Players took a cautious stance heading toward April CPI report slated for Friday. However, the market did not react to the softer-than-expected number, which showed inflation at +1.8% yoy in April (March +0.9% yoy), against the earlier consensus forecast of +2.2%. The soft inflation was attributed to the lower crude oil price on a year-on-year basis, despite the introduction of GST since Apr 1.
- Thai government bond yields dipped across the curve, as net buying interest supported by the dovish FOMC minutes released on Thursday. Meantime, daily volume edged higher from Bt21.0 billion to Bt22.1 billion, led by LB196A and LB21DA.
- Indonesia government bond market little changed on Friday in a relatively quiet day with bond auction looming next week and announcement of US CPI data. Bond traded in range for most of the day, while transactions were dominated by benchmark bonds in all tenors, amid mixed flows.
- Asian dollar credits closed firmer on the back of positive sentiment, guided by the latest FOMC minutes, which sounded relatively dovish. The iTraxx Asia ex-Japan IG Index stood at 105bps.
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