US Treasury yields edged lower across the curve, reacting to the declines in stock market, coupled with weaker-than-expected ADP jobs report for Oct (+147k against consensus +165k). Meantime, the Fed’s decision to hold rates unchanged also pressured the yields a tad lower, despite it was in line with market expectation. The Fed highligh

Market Roundup

• US Treasury yields edged lower across the curve, reacting to the declines in stock market, coupled with weaker-than-expected ADP jobs report for Oct (+147k against consensus +165k). Meantime, the Fed’s decision to hold rates unchanged also pressured the yields a tad lower, despite it was in line with market expectation. The Fed highlighted pickup in economic activity from the first half this year, along with strengthened labor market. Meantime, inflation is forecast to climb towards its 2% objective over the medium term period, as the low energy prices impact dissipates. Whilst accentuating its accommodative policy stance, policymakers see economic conditions only warrant gradual interest rate hikes, and stating rates will remain “lower than expected to prevail in the longer run”.
• Malaysian government bond yields continued to move in narrow ranges amid muted trading interest Wednesday. Total daily volume shrank to RM1.6 billion, from RM2.4 billion a day prior, as the majority of players preferred to wait for the outcome of risk events (FOMC and US presidential election).
• Thai govvies hovered near prior levels, with exception of long dated bonds which were under pressure in conjunction with the LB366A auction held on Wednesday. The LB366A auction saw poor demand, as the issue size was pared lower to Bt4.3 billion, from indicative size of Bt12 billion earlier. Bid-to-cover ratio was 0.79 times, while average yield stopped at 2.7038%, within a spread of 2.6800-2.7200%. On the flipside, Thai IRS rates inched lower by 1-2bps across the curve.
• Indonesian bond market was very quiet ahead of the FOMC meeting. Bonds were traded in tight ranges, whilst volume was thin. We believe activities in the bond market will be limited ahead of next week's US election, and we expect Indonesian govvies to remain resilient.