US Treasuries were dealt firmer as crude oil prices fell and stock markets closed weaker. Players also watched economic data ahead of a busy couple of weeks of events and other releases including the presidential elections, FOMC meeting and Oct jobs report. US personal spending rose by a tad faster than cons

Market Roundup

• US Treasuries were dealt firmer as crude oil prices fell and stock markets closed weaker. Players also watched economic data ahead of a busy couple of weeks of events and other releases including the presidential elections, FOMC meeting and Oct jobs report.
• US personal spending rose by a tad faster than consensus, at +0.5% (consensus +0.4%) in Sep against a 0.1% contraction in Aug. The PCE core rose 1.7% yoy and 0.1% mom in Sep, meeting expectations.
• The USD strengthened mildly overnight (DXY around 48.445 this morning) as we still await the FOMC meeting. On the flipside, GBP was firmer to around 1.2234 this morning from 1.2134 close last week. GBP got a shot in the arm with BoE governont Mark Carney reportedly claiming he will stay at his current position till Jun 2019 to see through the Brexit process.
• Although there is potential of a Bank Negara Malaysia interest rate cut come the Nov MPC meeting, we expect negative pressure on Ringgit bonds and swaps to persist in the short-term period due to uncertainties ahead of the Nov FOMC meeting, US presidential election, and the recent slump in global bonds. We expect 3-year MGS to maintain weakness and we raise our weekly target to 3.05%. Meantime, we have data this week, but expect declines in trade numbers will maintain pressure on MYR. Sep exports is expected to show 2.0% yoy contraction versus 1.5% yoy growth in Aug. Consensus expectations indicate imports will contract by a smaller margin (-1.0%), leading to a smaller trade balance.
• Thai government bonds closed steady Monday despite overall net selling by offshore players. Exports rose 3.5% yoy in Sep against +2.7% in Aug whilst imports rose 1.7% (-0.1% Aug) bringing trade balance to a higher $3721 million from $2736 million in Aug. The current account fell to $2929 million in Sep from $3805 million in Aug but higher than earlier consensus of $2550 million. Yet, despite the bargain hunting interest, having now exceeded our 10-year govvies target of 2.17%, and with USD expected to show strength ahead of FOMC meeting and US elections, we shift our 10-year govvies target a tad higher to 2.20%. Foreign investors were net sellers of Bt2.96 billion of Baht denominated bonds Monday.
• IDR government bonds rebounded on Monday on net buying action near closing hours, the 5- and 10-year tenors led gains. However we suspect liquidity was thin, the buying action causing yields down 7-10 bps easily.