US Treasury yield curve steepened with net selling slanted to the bellies and far end, despite a blip following release of weaker-than-expected non-farm payrolls. The NFP reported a job gain

Market Roundup

• US Treasury yield curve steepened with net selling slanted to the bellies and far end, despite a blip following release of weaker-than-expected non-farm payrolls. The NFP reported a job gain of 151k in Aug, below 180k forecasted earlier. However, gains in US Treasuries were eventually reversed after the Richmond Fed president Jeffrey Lacker stated that “the Fed Funds rate should be significantly higher than it is now”.
• Despite the possibility of rate hike(s) remains intact for this year, players downplayed a Sep rate hike by Fed, as the short term yields were only marginally higher, in contrast to the longer dated yields.
• Meantime, unemployment rate stood unchanged at 4.9% during the same period. Factory orders expanded by a lower margin of +1.9% in Jul, in contrast to consensus +2.0%. Elsewhere, durable goods orders were in line with market expectation, reported a growth rate of 4.4% in Jul. Factory orders was below expectation at +1.9% in Jul.
• Ringgit govvies posted losses, alongside weaker Ringgit on Friday. However, we think there would be support for shorter tenor bonds, coming ahead of Bank Negara MPC meeting is scheduled for 7 Sep. Elsewhere, the market was pretty quiet, similar region-wide, as players awaited the Aug US non-farm payrolls data release.
• Thai Baht was relatively firm by end-of-week, hovering near 34.623 late Friday from almost similar levels the day before. Meantime, THB government bonds were dealt mixed – short tenor papers in demand but only shedding 1-2bps, amid a lack of fresh drivers.
• Indonesian government bonds were traded up again on Friday following the weak CPI data. Offshore names were seen behind the buying action, sending yields down by 6-7 bps across the curve. Market volume decreased to IDR11.1 trillion and dominated by bonds maturing in less than 10 years (58%).