US Treasury yields were initially lower, but later rose as players reassessed the NFP data. The

Market Roundup

• US Treasury yields were initially lower, but later rose as players reassessed the NFP data. The Mar non-farm payrolls were disappointing with total job creation of 98k, lower than 180k consensus, whilst average hourly earnings rose 0.20% mom. However, unemployment rate further declined to 4.5% during the same period, from 4.7% a month prior. In addition, weak jobs numbers were partly attributed to bad weather condition during the month and remains to be seen the response from FOMC on the apparent bad NFP number. Yields also fell on safe-haven flows after the Syria strike ordered by President Trump.
• Despite the weaker-than-expect NFP number, USD recovered from earlier session losses and traded firmer against major rivals, amid hawkish Fed comments. NY Fed Dudley’s said any pause in rate hikes to allow the Fed’s balance sheet unwinding would be very brief. DXY index closed higher at 101.18 ahead of weekend. USD/JPY edged higher to around 111.10, whilst EUR/USD dipped below 1.0600 late Friday.
• MYR govvies recovered a tad, but overall sentiment remained cautious awaiting Friday’s non-farm payrolls data. Meanwhile, foreign holdings in Malaysian sovereign bonds (both MGS and GII) plunged from 29.8% in Feb, to 25.8% in Mar, equivalent to RM23.7 billion month-on-month decline though this was partially due to the RM10.5 billion MGS Mar’17 maturity. The net selling amount was larger than what we expected, but the heavy selling appeared to be well absorbed by the market.
• On bright side, Fitch reaffirmed Malaysia’s credit rating at A3, with Stable outlook, which the rating agency said is underpinned by Malaysia’s strong net external creditor position, higher-than-peers’ economic growth, and current account surplus.
• The Thai bond market was traded on thin liquidity as the market waited for US NFP report and the 2-day conclusion of Donald Trump and Xi Jinping summit in Florida. US missile strike on Syria stroke concerns over geopolitical tension between US and N. Korea. Therefore, EM asset was under selling pressure and Korean won together with the KOSPI index recorded loss for the week ended 7 Apr. USD/THB also ended higher about 34.61 at 6PM driven by risk-off sentiment.  Thai bond market received negative spillover from net foreign selling in Thai bond at Bt1.30 billion last Friday but the risk-off sentiment was relatively mild as the SET index managed to close higher at 1,583.53 and Thai govvies did not retreat as some offshore investors continued to buy long-term LB –15-year bonds inched lower about 1-2bps.
• Indonesia government bonds weakened amid risk-off sentiment after the US air strike. However, as yields rose, some support came back in the afternoon session but largely on short covering though some interest for benchmark series were also noted.