The US Treasuries market closed with mild changes Tuesday, despite gains in stock market and

Market Roundup

• The US Treasuries market closed with mild changes Tuesday, despite gains in stock market and crude oil prices as well as a positive housing data release. Instead, bonds were supported by buying-on-dips interest.         New home sales registered at 654k in Jul, above consensus estimate 580k, and the previous month’s 582k. Elsewhere, there was a 2T auction which was conducted at size of $26 billion. Demand was decent, indicated by a bid-to-cover ratio of 2.83 times, compared to the average 2.88 times garnered in the past twelve similar auctions held. High yield was generated at 0.76%, while indirect bidders accounted for 45.8% of the sales.
• US Dollar was little changed Tuesday with Jackson Hole up ahead whilst sterling remained firm but Euro slightly weaker. In the Euro Zone, the Euro was under some pressure with PMI data mixed. The Euro Zone’s manufacturing PMI fell to a reading of 51.8 in Aug from 52.0 in Jul as well as below the consensus expectation of 52.0. The Euro Zone services PMI was more encouraging with reading of 53.1 in Aug versus 52.9 in Jul and consensus of 52.8. EUR/USD was about 1.1300 this morning. Quick resistance appears to be around 1.1370 level, but much depends on USD movement after Yellen’s comments in Jackson Hole.
• Ringgit sovereign bonds posted mild gains alongside a more stable Ringgit. On the other hand, we think that market appears to be directionless at this juncture, and players are still waiting for catalysts from inflation data and the Jackson Hole conference. The central bank announced reopening auction for the 10-year MGS, with an issue size of RM3 billion, slightly lower than our expected size of RM3.5 billion. WI was heard around 3.55/53%.
• Thai govvies closed relatively flat amid thinner flows amounting Bt7.9 billion on Tuesday. In our opinion, cautious sentiment remains intact, as players preferred to shorten duration in their portfolio at this juncture. Meantime, USD/THB appeared to be capped at 34.70, while immediate support should be at 34.50 in the near term period.
• Indonesian govvies extended losses on Tuesday. Despite the locals’ support, offshore players were seen on the selling side, due to concerns on the higher probability of Fed rate hike, sending yields up 8-10 bps across the curve. MoF held Syariah bond auction with IDR4 trillion target, and received incoming bids of IDR15.3 trillion. However, the government only upsized IDR370 billion more from the initial target. Market volume increased to IDR10.6 trillion and was dominated by bonds maturing in 10 years or less (63%).