Thailand: The bond curve bear steepened as the 4-14-year bucket s (mainly LB21-23, LB26, and LB316A) rose 1-2 bps led by profit taking activity amongst local players. In addition, foreign investors were net sellers of of short- and long-term bonds at Bt254 million and Bt2.05 billion respectively. We view the rally in bonds attracted selling pressure before event risk such as NFP on Friday. Separately, in the Treasury Bill (TB) market, the BoT announced plan to reduce auction size to Bt5.0bi

Market Roundup

• US Treasuries gained as core PCE inflation rose at 1.5% yoy in Apr or just meeting consensus expectation but which was also the lowest monthly increase since Mar last year. On the flipside, Fed governor Lael Brainard commented that a rate hike is likely to be appropriate. The yield curve flattened further with the 2x10 spread at 93bps overnight.
• Malaysia: MGS closed mildly weaker amid some pressure on MYR. Nonetheless, auction of the 7-year GII (GII Aug’24) saw firm demand at bid-cover-ratio of 2.48 times for the RM3.0 billion public tender (another RM1.0 billion privately placed). Average yield was 3.926% (and where highest to lowest range was 3.933/909%) which was lower against WI of 3.95/90% the day before.
• Thailand: The bond curve bear steepened as the 4-14-year bucket s (mainly LB21-23, LB26, and LB316A) rose 1-2 bps led by profit taking activity amongst local players. In addition, foreign investors were net sellers of of short- and long-term bonds at Bt254 million and Bt2.05 billion respectively. We view the rally in bonds attracted selling pressure before event risk such as NFP on Friday. Separately, in the Treasury Bill (TB) market, the BoT announced plan to reduce auction size to Bt5.0billion from about Bt20billion per auction which usually takes place every Monday. Consequently, short-term (less than 30 days) supply will substantially contract about Bt60 billion per month. This may be BoT’s effort to curb foreign fund inflows into short-term bonds and to slow the baht's appreciation.
• Indonesia: Indonesia government bonds were traded slightly weaker on Tuesday in light trading volume. In general, the move was sideways amid thin activities with local names as net sellers. MoF held a IDR Sharia bond auction with incoming bids relatively low at only IDR11 trillion. The government issued IDR4.08 trillion of Sharia bonds, lower than IDR5 trillion target. volume improved a tad to IDR8.8 trillion and was dominated by bonds maturing in over 10 years (42%) and maturing between 1 and 5 years (31%).