Market Roundup
- US Treasuries closed Wednesday on firm footing, alongside weak performance along the US stock markets and supported by strong demand at the latest government debt auction. A large portion of players expecting the FOMC to hold interest rates at the upcoming policy meeting also ensured a firm closing for the UST.
- The US Dollar was mixed to firmer against the JPY and EUR, which eased off as safe haven flows were reversed. The US Dollar did not manage to be boosted as US stock markets did not respond to Asia’s stock rebound on the heels of China’s stimulus announcement. EUR/USD is now at 1.1236 and USD/JPY at 120.20.
- The Ringgit is weaker today at 4.3700 against 4.3027 Wednesday with domestic issues still lingering. Malaysia awaits Friday’s Bank Negara policy rate meeting with economists not expecting the central bank to shift from the current rate of 3.25%. However, the Ringgit is following downward movement in regional currencies today, as markets reacted to Brazil’s ratings downgrade to junk and decline in US stock markets overnight.
- Malaysian government bonds posted gains but on relatively thin volume on Wednesday. We suspect both domestic and offshore players were net buyers on the day, supported by some late downshift in USD/MYR and lower IRS. News of better performing regional stock markets also boosted sentiment for the MYR and bonds. The currency pair was seen just below the 4.3000 level late Wednesday.
- Thai government bonds closed mixed Wednesday with relatively larger movement in yields, and not much was heard from offshore players as they were net sellers of Bt2.6 billion of THB bonds during the day.
- The IDR denominated government bond market was directionless on Wednesday, ultimately being traded mixed on thin volume. Most players were sidelined while waiting for the government's economic stimulus announcement in the afternoon. We still maintain our view to stay light ahead of next week's FOMC.
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