US Treasuries recovered partial losses posted late last week, guided by buying-on-dips interest in conjunction with better demand in safe haven assets amid declines in stock market and crude oil price. We maintain short-term target for 10T at 1.85% end-month, suggesting milder steepeners from this point on; targeting 2X10 upside limit at 100bps.

Market Roundup

• US Treasuries recovered partial losses posted late last week, guided by buying-on-dips interest in conjunction with better demand in safe haven assets amid declines in stock market and crude oil price. We maintain short-term target for 10T at 1.85% end-month, suggesting milder steepeners from this point on; targeting 2X10 upside limit at 100bps.
• Malaysian government bonds weakened, guided by mild selling interest amid thin liquidity. On top of that, we noted players trimming positions on longer dated GII papers, which included 10- and 15-year benchmarks. Aside, IRS curve also ended higher and steeper, tracking the upticks in UST yields last Friday.
• Thai sovereign bonds closed mixed on Monday. We noted better support in Thai bond market, as sentiment improved since late last week. Despite that, upward pressure on yields remains, in our opinion. Short term resistance for 10-year govvies is pretty close at 2.27%, break of which brings next level at 2.37% and then 2.47%.
• Selling pressure again in Indonesian government bond market, with foreign banks were seen on selling side amidst muted flows.  The selling pressure on the 5-year tenor weighed on other tenors along and sending the yields rose by 5-8 bps across the curve. Local names were seen buying on smaller volume on certain tenors and 10-year benchmark. Volume was steady amounting IDR8.8 trillion and was dominated by bonds maturing between 5 and 10 years (49%).