US Treasury yields were initially higher in the earlier session Tuesday but subsequently edged lower across the curve, tracking declining oil prices. Brent crude oil was traded at $50.46/bbl, down

Market Roundup

• US Treasury yields were initially higher in the earlier session Tuesday but subsequently edged lower across the curve, tracking declining oil prices. Brent crude oil was traded at $50.46/bbl, down from $51.52/bbl on Monday. Meantime, players await the FOMC meeting. Fed funds futures trading imply only 12.8% possibility that Fed will raise 25bps during this meeting but focus turns towards language in the Fed’s statements as well signals of plans to decrease the size of its balance sheet (off bonds purchased during the financial crisis). Elsewhere, there was mild buying of the safer haven UST after Trump tweeted frustration the latest congressional deal did not include spending on his border wall. He implied the US needed a good ‘shutdown’ to fix the mess he believes the US is in.
• Malaysian sovereign bonds posted gains after the market reopened post long weekend. Notably, the 10-year MGS dipped by 7bps and closed at 3.98%, the lowest since Nov 2016. We suspect foreign players remain net buyers, supported by strengthening MYR (USD/MYR hovering at 4.3300 late Tuesday).
• It was a slow day in the IndoGB market on Tuesday. Bonds were traded in tight ranges the entire day, while key events such as April CPI and Syariah auction did not move market by much. April CPI rose 4.17% yoy (from 4.10% expected, vs 3.61% prior month), driven by housing, electricity and gas costs. At the Syariah bond auction, the government received low incoming bids at IDR10.95 trillion, and decided to downsize the issuance to IDR4.08 trillion from IDR6 trillion target. Market did not move until close. Market volume increased a tad to IDR11.9 trillion and dominated by bond maturing in over 10 years (42%).