US Treasury yields edged lower, following the release of US non-farm payrolls data. The total job creation was recorded at 156k in Sep, lower than 172k forecasted by economists earlier, whilst the unemployme

Market Roundup

• US Treasury yields edged lower, following the release of US non-farm payrolls data. The total job creation was recorded at 156k in Sep, lower than 172k forecasted by economists earlier, whilst the unemployment rate inched higher from 4.9% to 5.0%, due to larger amount of job seekers.
• Despite the disappointing job data, the 10T yield continued to anchor above 1.70%, signifying sustained market view of a Dec rate hike (though not so a possible Nov hike). The Fed Funds futures trading showed 17.1% probability for a Nov hike, in contrast to 23.6% a day before the non-farm payrolls release. Probability of a Dec hike is 64.3%, up from 63.6% before the Sep NFP release.
• Malaysian sovereign bonds were dealt weaker alongside higher IRS rates on Friday. Sentiment was guarded ahead of the US non-farm payrolls release, while pressure was added by higher USD/MYR (hovered at 4.15 late Friday). Meanwhile, Malaysia registered a trade surplus amounting to RM8.5 billion in Aug, against RM6.6 billion earlier forecasted by economists. Both exports and imports saw improved numbers. Exports expanded 1.5% yoy (-5.5% in Jul), whilst imports grew by 4.9% (-4.7% in Jul). Aside, foreign reserves were unchanged at $97.7 billion as at 30 Sep.
• Thai sovereign bonds further weakened ahead of the weekend, as players preferred to trim positions pending the NFP release. Flows were also thinner, with daily volume totalling Bt10.7 billion, lower than Bt18.1 billion registered Thursday.  This week, focus will be on LB316A auction slated for 12 Oct, which is expected to be issued with a size of Bt15 billion. We think that the new supply may add pressure to the long dated papers, despite a possible short term relief in Thai bonds, benefiting from the weaker-than-expected NFP.
• Indonesian government bond market experienced continued net selling pressure, especially in early hours by local banks. Pressure was further exerted by short-selling action on Friday. However, net buying support from local end clients in the afternoon eased the selling pressure. Market ended lower by 25-50 cents in term of price, and we think those who short sell would be buying back on auction day. Market volume was stable amounting IDR6.9 trillion and dominated by bonds maturing in over 10 years (40%) and bonds maturing in one year (26%). In the coming week, the government will auction IDR12 trillion worth of bonds.