US Treasuries rallied as the market took a breather from the previous selloff amid still little in surprising fiscal policies announced by Trump. Apart from that, the dip in stock markets and crude oil prices also weighed UST yields lower on Monday.

Market Roundup

• US Treasuries rallied as the market took a breather from the previous selloff amid still little in surprising fiscal policies announced by Trump. Apart from that, the dip in stock markets and crude oil prices also weighed UST yields lower on Monday.
• USD strength eased after the new US president provided little clues on additional fiscal policies to boost the economy. DXY index went lower to 100.16, from 100.74 last Friday. USD/JPY was now trading near a one-month low at 112.58, down from 114.62 last week. Aside, EUR/USD remained bullish and edged higher, approaching its immediate resistance at 1.0800.
• Malaysian sovereign bonds extended gains, amid net buying interest early this week. IRS rates edged lower by 2-6bps across the curve, along with firmer Ringgit. Apart from that, we heard some foreign players returned and tapped on Ringgit govvies, possibly aided by recovery in Ringgit and stabilizing crude oil prices.
• Thai govvies yield edged lower 1-2bps across the curve according to the spillover of Trump's inauguration last Friday that sparked gains in US Treasuries. This week's auction of Bt8.0 billion 20-year LB366A may draw some pent-up demand from insurance companies and upside is likely to be capped at 3.30%. But we do not expect solid demand as appetite for long-term bond is relatively low amid rising economic and inflation outlook backdrop. Similar to the bond market, the swap curve flattened as yield in the mid- to long-end segment nudged lower 1-2bps.
• Short end bond remained favorable in the IDR government bond market on Monday in which local and offshore names were seen in this segment. This strong buying interest eventually dragged longer tenor to be traded firmer. Benchmark series traded stronger on local buying interest especially in 15-20-year papers. However, trading volume was low. Today, the government will hold a sharia auction with IDR6 trillion target amount, and we believe demand will be solid with focus remaining on short dated bonds. Volume fell to IDR5.1 trillion.