US Treasuries moved in narrower ranges and settled marginally firmer, reacting to the mixed comments made by Fed members. Atlanta Fed president Dennis Lockhart reckoned that data

Market Roundup

• US Treasuries moved in narrower ranges and settled marginally firmer, reacting to the mixed comments made by Fed members. Atlanta Fed president Dennis Lockhart reckoned that data in recent weeks “warranted serious discussion of a policy rate increase”. Meantime, Minneapolis Fed chief Neel Kashkari mentioned there is no urgency to raise rates. Apart from that, Fed Governor Lael Brainard sounded dovish, saying that it would be “unwise for policy to foreclose on the possibility of making further gains in labor market, in the presence of uncertainty and the absence of accelerating inflationary pressures”.
• USD reversed most of the gains, on the back of mixed remarks from Fed officials on Monday. USD/JPY was under pressure and corrected lower, after touching 103.00 late last week. EUR/USD was range traded, but appeared to be supported at 1.1200. We see topside to be capped at 1.1400 in the short term period.
• Malaysian bond market closed on Hari Raya Haji. Ahead of the long weekend, Ringgit sovereign bonds were thinly traded, with yields climbed higher by 2-4bps across the curve amid a lack of support. Flows were led by the maturing MGS Sep’16, which transacted about RM1.4 billion throughout the day. The 5-year MGS reopening auction was announced with an issue size of RM3 billion. WI was last heard at 3.19/16%.
• Elsewhere, industrial production grew by a slower rate of 4.1% yoy in Jul, against consensus 4.5% and Jun’s 5.3% growth.
• Thai sovereign bonds posted losses, tracking the weaker UST, weighed by sooner-than-expected Fed rate hike speculation. Flows were thinner totalling Bt8.5 billion, compared to Bt15.3 billion recorded last Friday. Upcoming focus will be on LB666A auction scheduled on 16 Sep, with an indicative size of Bt13 billion.
• Indonesian bond market was closed on Idul Adha. Last Friday, the government bond yield curve went up around 3 bps on the back of uncertainty over BOJ's policy stance. Volume was thin on Friday as the next working day (Tuesday) will be auction day, where MoF targets to issue IDR12 trillion in the auction. Market volume halved to IDR8.5 trillion and dominated by bonds maturing in over 10 years (44%) and bonds maturing between 1 and 5 years (32%).