US Treasuries saw greater volatility and ended weaker on Friday, reacting to the remarks made

Market Roundup

• US Treasuries saw greater volatility and ended weaker on Friday, reacting to the remarks made by Fed chief Janet Yellen and Vice Chairman Stanley Fischer. The Fed chief mentioned that the case for raising rates has strengthened in recent months, but reiterated that the tightening path should be gradual. On the other hand, the Vice Chairman sounded hawkish as he stated that the possibility of two hikes remains intact for this year. According to the Fed Funds futures trading, market now perceived higher possibility for a hike of 42.0% and 46.6% in Sep and Dec respectively, in contrast to 32.0% and 43.6% before the Fed officials’ comments.
• The Ringgit government bond market was pretty quiet Friday, coming ahead of Yellen’s speech at Jackson Hole and with MYR showing limited strength (USD/MYR not sustainable below 4.0200 by Friday evening). Volume traded along the MGS+GII segment was just about RM2.1 billion for the day.
• The Thai government bond market closed mixed on Friday amid continued though smaller net buy from offshore players – who bought around Bt296 million Thai bonds versus over Bt1.6 billion and Bt2.3 billion in two days prior. The market was supported by weak macro data, where custom exports fell 4.4% yoy in Jul against -2.2% consensus and Jun’s -0.07%. However, sentiment was also guarded ahead of Yellen’s speech at Jackson Hole.
• Indonesia government bond market went basically nowhere on Friday. Few activities were seen on 5-yearr FR53 and 10-year FR56 benchmark bonds in an otherwise quiet market ahead of Janet Yellen's speech in Jackson Hole. Market volume dropped to IDR5.4 trillion only and equally divided between bonds maturing before and after 10 years.