US Treasuries lost further ground though losses were limited as players await Janet Yellen’

Market Roundup

• US Treasuries lost further ground though losses were limited as players await Janet Yellen’s presentation in Jackson Hole, WY. We should expect an increase in UST volatility on after her speech. But for now, UST yields were lifted marginally higher on release of a couple of firm macro indicators.
• Kansas City Fed president Esther George, a voting member of the Fed's policy committee, sounded hawkish as she reckoned that it would be appropriate to raise rate based on the current jobs and inflation conditions, as well as inflation outlook. Meantime, she stated that the Fed policy continued to be data dependent.
• Dallas Fed chief Robert Kaplan also signalled that a case is strengthening for a rate hike but did not spell out a timetable for monetary tightening. In any case, Kaplan is not a voting FOMC member currently.
• The USD index was heard 0.02% lower to 94.76 with the market reluctant to alter positions ahead of Fed chair Yellen's speech on Friday. Aside, Japan’s CPI was heard down 0.5% yoy in Jul. USD/JPY was firm near 100.44 this morning.
• Ringgit sovereign bonds posted mild gains, reacting to the soft Jul inflation data released a day prior. Flows remained heavy, with daily volume of RM3.6 billion, aided by the 10-year MGS reopening. The RM3 billion auction saw decent demand on bid-cover of 1.752 times and average yield 3.563%, within a spread of 3.530-3.578%, and higher than WI 3.54/53% quoted on Wednesday. We maintain our short term target for the 10-year MGS at 3.42%, with support from rate cut expectations.
• Thai sovereign bonds closed mixed, whilst IRS rates edged lower on Thursday. We noted some buying-on-dips interest came into support, after the persistent weakness shown by Thai bonds lately post 2Q2016 GDP release. On the other hand, daily transaction decreased from Bt16.5 billion to Bt12.6 billion.
• Indonesian govvies were generally traded in tight ranges on Thursday, despite improved local bidding interest upon market opened. Market was relatively quiet, as most market players stayed on the sidelines as all eyes will be on Janet Yellen's speech in Jackson Hole on Friday evening during Asian time. Market volume was steady amounting IDR8.7 trillion and dominated by bonds maturing in over 10 years (56%) and bonds maturing between 1 and 5 years (23%).