US Treasury yields edged higher, amid profit taking activities in conjunction with the recovery in stock markets and crude oil prices.

Market Roundup

• US Treasury yields edged higher, amid profit taking activities in conjunction with the recovery in stock markets and crude oil prices. We think that the yields will climb further in the near term as risk-off sentiment triggered by Brexit eased.
• Malaysian sovereign bonds posted gains, aided by improved sentiment due to the stronger MYR and higher crude oil prices on Tuesday. Trading volume was heavy at RM6.3 billion, led by GII papers, whilst we heard foreign players tapping onto GII papers for better yield pickups. Apart from that, the gains were also supported by increased speculation for a rate cut in the upcoming MPC meeting scheduled in Jul. WI for the 30-year MGS was last quoted at 4.63/60%, much tighter than 4.79/60% seen a day prior.
• Thai govvies extended gains amid persistent flows for safe-haven assets in the EM space. However, we think that the upside may be capped, as risk-off sentiment eased following the recovery in crude oil prices and regional stock markets, which may eventually prompt for profit taking pressure in the near term. Meantime, daily volume edged higher from Bt22.4 billion to Bt24.6 billion on Tuesday.
• Indonesian government bond market continued to see good bidding interest. Market was well bid on opening but market offers looked thin. Bonds were traded firmer with yield curve went down 12-15 bps after government approved the tax amnesty bill, supported by both local and foreign buyers. Some local banks were on the selling side, capping the upside. We think the tax amnesty can trigger yield curve to trend down further, added by Brexit issue that enhance some possibilities for another round of monetary easing.