US Treasury yield curve moved steeper. Long dated bonds were under pressure after Fed chief Janet Yellen stated the Fed may need to allow inflation to go above its 2% objective and the economy to grow above potential, in order to boost

Market Roundup

• US Treasury yield curve moved steeper. Long dated bonds were under pressure after Fed chief Janet Yellen stated the Fed may need to allow inflation to go above its 2% objective and the economy to grow above potential, in order to boost investment levels. The UST market reacted to advance retail sales which met consensus at +0.6% mom in Sep and the Sep headline PPI up 0.3% mom against +0.2% consensus.
• Ringgit govvies closed on stronger footing, tracking overnight gains in UST. Ringgit was also firmer, with USD/MYR hovering below 4.2000 late Friday. Aside, trading volume was thinner at RM2.3 billion, down from RM4.3 billion a day prior. Incoming drivers for bond market trading, data-wise, will be release of Sep CPI, where consensus sees a rise of 1.8% yoy, higher than 1.5% yoy registered a month previously.
• Thai government bonds pared earlier week losses, as sentiment turned positive with Prime Minister Prayuth Chan-Ocha’s statements trying to calm investors’ concerns, after the King’s passing. IRS curve fell substantially by 4-15bps across the curve. Aside, there will be an auction for LB666A (indicative size of Bt14 billion) scheduled on 19 Oct.
• Indonesian government bonds traded slightly firmer on local net buying interests. We noted sellers in short dated bonds, but better net buying on the bellies of the curve and balanced flows on long dated bonds. We believe sentiment turned positive following recent low inflation data and Indonesia’s FX reserves increasing to the highest since Apr 2012 to $115.7 billion. Market volume decreased to IDR8.3 trillion and was dominated by bonds maturing between 1 and 5 years (36%).