US Treasuries recovered some of its losses posted late last week, supported by bargain-hunting amid a lack of fresh catalysts. We think the market should see sideways consolidation in the short term period; reacting more to possibly mixed-to-firmer economic data ahead, before the US president-elect takes office on 20 Jan.

Market Roundup

• US Treasuries recovered some of its losses posted late last week, supported by bargain-hunting amid a lack of fresh catalysts. We think the market should see sideways consolidation in the short term period; reacting more to possibly mixed-to-firmer economic data ahead, before the US president-elect takes office on 20 Jan.
• Boston Fed President Eric Rosengren expects the normalizing pace to be quicker, as inflation is heading toward the Fed’s 2% objective by end of 2017. On the flipside, Atlanta Fed President Dennis Lockhart sees the Fed is “quite close to achieving its mandated policy objectives of full employment and stable prices”. We think Lockhart’s view is a tad different from recent comments from other Fed members, suggesting maybe a more gradual series of rate hikes. Indeed, Lockhart indicated as much, that a “gradual” pace is expected from the Fed.
• USD strength eased and the DXY index dipped to 101.93 from 102.22 registered on Friday post NFP report release. EUR/USD moved higher to hover near 1.0575 late Monday. Aside, USD/JPY fell lower to 116.00, still above the immediate support level of 115.00.
• Ringgit sovereign bonds closed little changed. However, there was mild profit-taking pressure particularly on the 15-year MGS, ahead of the upcoming tender which is potentially announced by this week. Players will be eyeing the Nov industrial production release (consensus +5.5% yoy) this Wednesday.
• THB denominated govvies extended losses, amid thinner trading volume totaling Bt6.6 billion, in contrast to Bt11.3 billion registered late last week. Despite weakness in the bond market, THB recovered a tad against USD, as USD/THB marked lower at 35.68 on Monday.
• After two consecutive days of net selling activities, foreign players added Bt1.5 billion worth of Thai bonds into their portfolios.
• Indonesian government bonds were traded weaker on profit taking action on Monday especially on the belly to longer part of the curve. Local names remained net sellers while foreign names and local FM were on the buying side on the front of the curve. The government will hold a Sukuk auction today with target amount of IDR6 trillion or higher versus last year’s target per auction amounting to IDR4 trillion. We expect solid demand for this auction with focus on short end tenors. Meantime, FX reserves reported jumped to $116.36 billion from $111.4 billion last month, the highest since April 2012.