Early strength in trading gave way to some late net selling pressure in US Treasuries after release of stronger-than-expected US PMI manufacturing index (reading of 53.2 for Oct against 51.5 consensus). There was little else to move the market. Me

Market Roundup

• Early strength in trading gave way to some late net selling pressure in US Treasuries after release of stronger-than-expected US PMI manufacturing index (reading of 53.2 for Oct against 51.5 consensus). There was little else to move the market. Meanwhile, the market heard from St Louis fed president and voting member James Bullard who mentioned one rate hike appears sufficient for now. We expect sentiment to grow more cautious as we head towards the 2 Nov FOMC decision though markets are not expecting the Fed to move interest rates just yet. We just think some profit taking pressure may take hold especially if more data on tap this week, including advance 3Q2016 GDP, show firm figures.
• Ringgit government bonds were dealt firmer, following decline in IRS rates. For the day yields were down about 1-4bps. However, gains were led by GIIs, with the 10-year GII down about 6bps. To recap, by end-month, the 7- and 10-year GII will be included into the JP emerging market bond index. Elsewhere, swap rates fell 2-3bps. Sentiment was up after last week’s CPI coming out at a pretty subdued 1.5% and meeting most economists’ expectations.
• IDR government bonds extended the rally on Monday on interbank net buying interests.  The yield curve bull-steepened even ahead of the weekly auctions, and we expect auction demand will be moderate as local demand will be limited as the appetite for the auctioned series is low and we suspect that minimum bond holding obligation is almost achieved.  The series of bonds auctioned are SPN9M, 10Y, 15y, 20Y and 30Y.