US Treasuries extended losses as ADP jobs report showed gains of 298k in Feb, but there was mild strength ahead of the close amid lower global crude oil price. Meanwhile, the Treasury Department sold $20 billion of the 10T, priced at high yield of 2.560% versus a just 2.333% at the 10T auction last month, and coinciding with recent weakness in UST ahead of this month’s FOMC meeting. However, the auction registe

Market Roundup

• US Treasuries extended losses as ADP jobs report showed gains of 298k in Feb, but there was mild strength ahead of the close amid lower global crude oil price. Meanwhile, the Treasury Department sold $20 billion of the 10T, priced at high yield of 2.560% versus a just 2.333% at the 10T auction last month, and coinciding with recent weakness in UST ahead of this month’s FOMC meeting. However, the auction registered a bid-to-cover ratio of 2.66x, which was stronger than 2.29x last month and also strongest since Jun. Indirect bidders remain strong buyers, ending up with 65.8% of the amount sold.
• USD gained pretty strongly with DXY up to 102.70 this morning, ahead of this week’s NFP report due to firm reading in the Feb ADP jobs data. The ADP showed jobs gains of 298k in Feb against +187k consensus and Jan’s number was revised upwards to 261k from 246k prior estimate. As we head closer to the FOMC meeting, consensus for NFP is +200k for the month of Feb, versus +227k in Jan. A stronger than expected NFP (reflecting the ADP number) solidifies outlook for a Fed hike, which in any case Fed funds futures contracts already show a 100% probability of a hike this month.
• Malaysian sovereign bonds saw mixed trading interest Wednesday. As for the new 5-year MGS, WI was quoted at 3.875/865%, or tighter than 3.88/80% indicated a day prior. Expect good demand due to the large spread (median 34bps since early this year) against the 3-year benchmark.
• IndoGBs rallied since opening session on Wednesday, continuing its bullish movement since Tuesday on the back of JCR agency outlook upgrade on Indonesia. Players were frantically buying any series of bonds tenured 10- to 20-years, sending yield curve down by 4-7bps initially. However in afternoon session, profit taking pressure was seen everywhere in the curve until market closed, reversing any significant gains seen in the morning. Market volume almost doubled to IDR19 trillion and most traded bonds were those maturing in over 10 years (52%).