US Treasuries ended little changed post a strong NFP report last Friday. Yields were well

Market Roundup

• US Treasuries ended little changed post a strong NFP report last Friday. Yields were well supported by increased rate hike expectation and higher crude oil prices, but were capped by buying-on-dips, as yields continued to hover near the higher ranges of the past one-month period. WTI crude spot was about $43.02 overnight against $41.80 last Friday. The 10T is hovering around the immediate resistance of 1.58%, but we expect quick movement towards next resistance of 1.72%; ahead of 3-, 10-, and 30-year auctions and especially if this week’s macroeconomic data exceed expectations.
• USD strengthened further against major rivals. USD/JPY edged higher to 102.45, after bottoming near 101.00 last week. EUR/USD was moving in range, but subsequently ended with little changes at 1.1088. We see immediate support at 1.1000 at this juncture.
• Ringgit govvies weakened amid light trading interest. Sentiment was dampened by the strong US NFP report, but we noted little signs of net selling pressure, as sentiment was supported by relatively firm crude oil prices and MYR (around 4.0300 this morning). Market is eyeing on the 2Q2016 GDP data for further direction. Our view is the data will show decent growth of 4.0% yoy. Weak financial markets and credit conditions could have affected consumer spending in 2Q2016, whilst latest industrial production numbers had shown mild growth (+2.7% in May versus +3.0% in Apr 2016).
• THB denominated sovereign bonds posted losses, tracking the UST losses triggered by firm US NFP report released last Friday. On top of that, IRS rates climbed by up to 6bps across the curve. Trading activities were heavier, as daily volume edged higher from Bt14.5 billion to Bt15.9 billion, led by LB176A.
• Indonesian government bond market was traded in a tight range following last Friday's US jobs data. Volume was thin as levels consolidated at current levels. Elsewhere, MoF will be holding IDR Syariah bond auction today. In the last Syariah auction, the government received incoming bids of over IDR21 trillion, and today we will be able to see whether demand remains intact. Market volume dropped to IDR6.7 trillion and was dominated by bonds maturing in over 10 years (50%) and bonds maturing 1-5 years (22%).