On Tuesday, US Treasuries eked out small gains with yields down 1-2bps along the short end 2T and 5T attributed mainly to short covering ahead of major risk events and mixed macro data releases. The FOMC decision is awaited later on Wednesday before the Oct non-farm payrolls numbers due Friday and the presidential elections are held.

Market Roundup

• On Tuesday, US Treasuries eked out small gains with yields down 1-2bps along the short end 2T and 5T attributed mainly to short covering ahead of major risk events and mixed macro data releases. The FOMC decision is awaited later on Wednesday before the Oct non-farm payrolls numbers due Friday and the presidential elections are held.
• Data released on Tuesday include the ISM manufacturing index at reading of 51.9 for the month of Oct versus 51.7 consensus and the Sep reading of 51.5. The Oct NFP is expected to show a higher increase of 175k against 156k in Sep. Before the NFP, players look towards the ADP employment movement, expected at +165k in Oct (+154k in Sep).
• USD saw weakness despite global caution ahead of major risk events. But EUR was supported after recent releases of strong Euro Zone economic data whilst JPY stood firm after BoJ did not specify plans for prolonged monetary stimulus. However, BoJ specified when it expects Japan inflation will hit the 2.0% inflation target (which is end-2018).
• BoJ kept benchmark rate at -0.10% and lowered its forecast for 2017 consumer inflation to 1.5% from 1.7% forecast in Jul.
• Meanwhile, China’s official manufacturing PMI showed a surprise increase to a reading of 51.2 in Oct from 50.4 in Sep, and the country’s services PMI to 54.0 in Oct (53.7 in Sep). CNY was around 6.7657.
• Ringgit government bonds moved sideways. There was a lack of net buying interest despite Ringgit mildly recovering (USD/MYR hovered at 4.18 late Tuesday). Meantime, flows were thin, with daily volume amounting to RM2.4 billion. Expect players to stay on the sidelines ahead of risk events namely FOMC meeting and US presidential election, but sentiment may recover (supported by rate cut expectation) post these events heading towards MPC meeting slated 23 Nov.
• Thai sovereign yield curve steepened, with pressure exerted on the longer dated bonds, possibly due to the anticipated supply from Bt12 billion LB366A auction scheduled Wednesday. On the other hand, IRS rates were 2-5bps higher across the curve. Expect yields to move a tad higher ahead of FOMC meeting and US presidential election.On the data front, CPI recorded at +0.34% yoy in Oct, below consensus +0.40% and Sep +0.38% yoy.
• Indonesian government bond market opened with improved tone on Tuesday, continuing the previous day's rebound. However, profit taking pressure was seen after the Syariah bond auction result was announced in the afternoon, in which the government received bids only IDR4.975 trillion, where they upsized the issuance to IDR3.555 trillion from IDR3 trillion initial target. Oct CPI rose 3.31% yoy from 3.07% the previous month, while core CPI was a smaller +3.08% from 3.21%. Volume traded increased to IDR9.8 trillion and was dominated by bonds maturing in over 10 years (51%) and between 1 and 5 years (30%).