US Treasuries posted gains during mid-week, after the Fed decided to hold rates unchanged, whilst reiterated its accommodative policy stance

Market Roundup

• US Treasuries posted gains during mid-week, after the Fed decided to hold rates unchanged, whilst reiterated its accommodative policy stance. Aside, the FOMC statement pointed that the job market strengthened in Jun following poor growth in May, whilst economic activity continued to expand at modest rate. Again, the policymakers did not provide a clear timeline for the next hike, but signaled for only gradual increases in rates. The Fed Funds futures trading now implied a 24.8% and 36.9% possibility for a rate hike in Sep and Dec, in contrast to 26.0% and 39.1% a day prior.
• Trading activities remained relatively thin in Ringgit government bond market, as players preferred to stay at the sidelines awaiting FOMC outcome. However, we noted two way flows, with foreign players showing net buying interest particularly on the GII papers.
• Thai government bonds posted losses, as investors’ sentiment remained guarded. Highlight was on the Bt16 billion LB316A auction, which was ended with poor demand, indicated by bid-cover ratio of 1.17 times. Aside, average yield was generated at 2.4768%, within a spread of 2.4370-2.5000%.
• Indonesian govvies were traded firmer following cabinet reshuffling on Wednesday, and market responded positively to the news. Flows were dominated by both local and foreign onshore banks, alongside some local investors on the bidding side. Overall volume was normal, although less activity were seen in the afternoon with FOMC rate decision looming tonight. Meanwhile, daily volume doubled to IDR16.8 trillion and was dominated by bonds maturing in over 10 years (61%) and bonds maturing between 1 and 5 years (21%).