US Treasuries weakened with yields up sharply by as much as 7bps along the bellies and far end of the curve despite a lack of fresh economic data releases, albeit ahead of this Friday’s

Market Roundup

• US Treasuries weakened with yields up sharply by as much as 7bps along the bellies and far end of the curve despite a lack of fresh economic data releases, albeit ahead of this Friday’s release of Sep non-farm payrolls expected to show stronger monthly gains of 174k versus +151k in Aug. However, the biggest driver was a report from Bloomberg indicating ECB’s governing council was mulling tapering of its current asset purchases program (tapering of €10 billion of the current €80 billion per month of purchases).
• USD was showing strength against most peers ahead of more macro data releases this week, and despite unconfirmed rumors the ECB may be thinking of tapering off its €80 billion per month asset purchases program. The Euro Zone producer price index showed the rate of deflation (-2.1% yoy in Aug) is the slowest since mid-2015. The IMF said it is slashing its US 2016 GDP growth projection to +1.6%, down from +2.2% it projected in Jul, amid weak business investment and inventories.
• Ringgit govvies continued to shift sideways amid a lack of fresh catalysts. Daily trading volume was heavier at RM3.1 billion, up from RM2.1 billion registered on Monday, while flows were led by shorter dated papers. Bank Negara Malaysia announced details for the auction of new 3-year GII with size of RM3.5 billion. WI was last heard at 4.25/15%.
• Thai government bond yields inched higher across the curve, but long-dated 20-year bond was dealt firmer on Tuesday. While the Sep CPI was softer than expected at +0.38%, we think that upward pressure on yields remains as there is little positive catalysts at this juncture. Our short-term target for the 10-year benchmark is 2.27%. Foreign players recorded net buying amount totaling Bt1.7 billion on Tuesday.
• Indonesian government bond yields fell along the belly to long end of the curve as some buying interest was seen nearing closing hours, while very little activities were seen on the short end. In general the market was quiet while government held a Syariah bond auction on Tuesday. From an initial target of IDR3 trillion, government received IDR5.4 trillion worth of incoming bids and decided to issue Syariah bonds totaling IDR3.55 trillion. Secondary trading volume decreased to IDR6.7 trillion and was dominated by bonds maturing between 5 and 10 years (41%).