US Treasuries extended gains on the back of declines in crude oil prices and stock market on

Market Roundup

• US Treasuries extended gains on the back of declines in crude oil prices and stock market on Wednesday. Apart from that, safe haven sovereign bonds particularly from UK saw good demand, after the news reported that BoE was unable to purchase sufficient bonds on Tuesday as planned earlier.
• Ringgit govvies posted little gains alongside the recovery of MYR against USD, as USD/MYR hovered at 3.9900 late Wednesday. We think that the further strengthening in MYR will aid bond market, whilst focus remains on the Friday’s 2Q2016 GDP report. On the flipside, BNM announced the reopening auction for 15-year GII with an issue size of RM3 billion, higher than market expectation. WI was last quoted at 4.20/10%. Meantime, highlight will be on Jun industrial production data slated for today (consensus +2.5% yoy), before the Friday’s 2Q2016 GDP report (consensus +4.0% yoy).
• Thai sovereign bonds continued to move in narrow ranges during mid-week. Highlight was on LB26DA auction. Demand was decent, indicated by a bid-cover of 1.78 times for the Bt15 billion issue, whilst average yield stopped at 2.0910%, within a narrow spread of 2.0740-2.0990%. Upcoming focus will be on Friday’s 2Q2016 GDP report, where economists forecasted a growth rate of +3.2% yoy.
• Indonesian govvies traded firmer on better buying mode on Wednesday, led by foreign onshore banks, where the buying flows seem to be concentrating at shorter dated bonds up to 5-year upon market opened, however belly to long end followed suit, sending the yield curve lower by 3-4 bps on average at close. Bonds look more likely to break from its consolidation phase and the 10-year resistance level at 6.75% might be tested before the end of the week. Market volume increased to IDR11 trillion and was dominated by bonds maturing in over 10 years (52%) and money market (21%).