· Malaysia: GII curve bull-flattened after the announcement of the planned inclusion to the

MY & SG Bond Market Watch

·         Malaysia: GII curve bull-flattened after the announcement of the planned inclusion to the GBI-EM GD index, outperforming the MGS with the GII-MGS spread tightening to ~5bps from about 15-20bps previously. Looking ahead, in the September’s MPC meeting we do not expect a back-to-back cut in OPR, therefore the outcome should be bond market neutral. Our target yield for the 10y MGS is unchanged at 3.65% by end-3Q16.

·         Singapore: SGS yield curve was unchanged MoM along the 10y15y, while the front and longer end of the curve lowered slightly. A key determinant for near term market direction is the US nonfarm payroll this Friday as a strong data will increase the odds for a US rate hike, which in turn pushes the SGS curve moderately higher but we don’t expect disruptive selloff.