US Treasuries showed gains early Thursday’s session but these were pared later following $12 billion auction of the 30T. On the data front, import prices rose 0.4% mom in Dec but below +0.7 mom consensus though firm compared with -0.2% in Nov. Initial jobless claims was 247k in the week ended 7 Jan, up from 237k the week before but below consensus of 255k. Also, players digested mixed Fed officials’ comments. Chicago Fe

Market Roundup

• US Treasuries showed gains early Thursday’s session but these were pared later following $12 billion auction of the 30T. On the data front, import prices rose 0.4% mom in Dec but below +0.7 mom consensus though firm compared with -0.2% in Nov. Initial jobless claims was 247k in the week ended 7 Jan, up from 237k the week before but below consensus of 255k. Also, players digested mixed Fed officials’ comments. Chicago Fed president Charles Evans was pessimistic on the economy with less confidence in the labor market, while Philadelphia Fed’s Patrick Harker signaled his view of three 25bps Fed hikes this year.
• A USD rally up to DXY 102.95 was halted with the index now hovering near 101.35 with traders picking up other currencies including the Mexican peso, but not the GBP. Sterling came under pressure with British PM May announcing she will present an update on her Brexit talks next Tuesday.
• For today’s EM direction, we will watch CNY, on possible market reaction from Trump nominees’ comments at the senate confirmation hearings especially Rex Tillerson who vowed to block China’s overtures into the South China Sea.
• Malaysian sovereign papers closed mixed, with sentiment supported by the firmer Ringgit. On the other hand, IRS curve bull flattened, with 20-year IRS rate dropped by 11bps on Thursday.
• The RM4.0 billion 15-year MGS reopening auction saw strong demand, reflected by a bid-to-cover ratio of 2.503 times. Average yield was 4.786% or within the WI level of 4.79/78% quoted a day prior the tender closing. Post auction, we noted late demand which sent the tranche to close at 4.71%.
• Thai govvies were dealt on stronger footing, guided by gains in UST after US president-elect Trump provided little clarity on his fiscal policies. Daily volume was pretty heavy at Bt21.4 billion, surging from Bt12.0 billion Wednesday. Similarly, IRS rates fell across the curve as sentiment turned more bullish. Foreign players were net buyers of THB bonds Thursday, adding Bt3.1 billion.
• Indonesian govvies rallied on Thursday on the back of local buying flows after Trump’s news conference, in line with US Treasury movement. Local names seemed eager to buy especially on short dated 2- to 5-year papers in the morning, followed by 7- to 10-year bonds in the latter session. Offshore names were also net buyers especially in short dated SPN bills with 1- to 3-month bills proving very popular. The market was dominated by bonds maturing in over 10 years (34%).