US Treasuries strengthened with yields marginally lower across the curve, tracking gains in German bunds on the back of ECB’s hint of dishing out further stimulus. Elsewhere, San Francisco Fed president John Williams stated his support for one rate hi

Market Roundup

• US Treasuries strengthened with yields marginally lower across the curve, tracking gains in German bunds on the back of ECB’s hint of dishing out further stimulus. Elsewhere, San Francisco Fed president John Williams stated his support for one rate hike this year, and a few more in 2017, as “US economy is well-positioned to raise interest rates”.
• Ringgit govvies were dealt firmer last Friday, supported by buying-on-dips especially ahead of Malaysia’s Budget 2017 announcement. In our opinion, the fiscal consolidation path of the federal government remains intact despite headwinds due to lower oil prices and potential downside risk in global growth. Hence, we reckon that the positive sentiment may support Ringgit bonds in the short term period this week, before heading into FOMC meeting scheduled on 1-2 Nov. Apart from that, players will be eyeing the 20-year MGS reopening auction this week. We expect an issue size of RM2.5 billion.
• Thai government bonds moved in mixed direction amid a lack of fresh catalysts ahead of the long weekend. Trading flows were thinner at Bt14.3 billion. On the other hand, THB further weakened with USD/THB edging higher to 35.14. Upcoming focus will be LB226A auction with an indicated Bt30 billion slated for 26 Oct.
• Indonesian government bond market rallied following BI rate cut decision. Trading activity was focused on 1- to 5-year tenors, in which we have seen demand from both local and foreign players. We believe there is still room for upside from here especially on short-end tenors given term structure yield curve also fell following BI rate cut decision.