US Treasuries mildly strengthened with the curve steepening amid release of firm economic

Market Roundup

• US Treasuries mildly strengthened with the curve steepening amid release of firm economic numbers and gains in crude oil price and equities markets. Initial jobless claims fell to 262K in the week ended 13 Aug from 266k the week before. Meantime, the Philadelphia Fed manufacturing index rose to a positive reading of 2.0 in Aug from -2.9 in Jul. However, the Philly Fed’s new orders subindex fell to a reading of -7.2 from 11.8; and the employment gauge fell to -20 from -2.
• USD was pared lower against major rivals after the Fed minutes showed that policymakers failed to reach consensus in raising rates. Following the release of better-than-expected retail sales report, GBP/USD rose to around 1.3150, after hitting the low below 1.2900 earlier this week. UK retail sales ex-autos rose by 5.4% yoy in Jul against earlier consensus of 3.9% and the prior month’s 3.9%.
• Malaysian sovereign bonds strengthened post release of FOMC minutes; with gains led by GII papers following news that Malaysian sukuk may be included in the JP Morgan EM indices. We heard foreign inflows tapping the GIIs, sending spreads tighter between MGS and GII. Spread was about 4bps tighter between the 10-year benchmarks and about 2bps tighter for the 5-year benchmarks.
• Fitch Ratings has affirmed Malaysia’s long term foreign currency and local currency IDRs at ‘A-‘ with Stable outlook. Fitch cited positives as Malaysia’s net external credit position, firm GDP growth vis-à-vis peers in similar rating position and current account which is still in surplus. Negatives are the federal government debt and deficit levels.
• THB denominated government bonds saw little changes on Thursday. Flows were heavier at Bt22.2 billion, in contrast to Bt15.3 billion a day prior, whilst trading activities remained concentrated on LB176A.
• Indonesian government bond market was traded firmer ahead of BI rate decision. Buying flows were seen especially on the 5- and 15-year auctioned series, led by interest from foreign banks. Market volume totalled at IDR14.2 trillion on Thursday and was dominated by bonds maturing over 10 years (66%) and maturing 1 5 years (25%).
• Indonesian credit market was thinly transacted on Thursday with daily volume amounting to IDR252 billion. WOM Finance Apr’18 (AA) was the most traded paper by volume.