On Monday, US Treasuries consolidated at slightly-higher yields, as focus turned towards the upcoming FOMC meeting after the major risk events (ECB meeting and UK election) late last week. Aside, the rise in crude oil and fresh primary supplies in UST also lifted yi

Market Roundup

• On Monday, US Treasuries consolidated at slightly-higher yields, as focus turned towards the upcoming FOMC meeting after the major risk events (ECB meeting and UK election) late last week. Aside, the rise in crude oil and fresh primary supplies in UST also lifted yields. We reckon the cautious sentiment will push yields a tad higher before FOMC this week.
• Greenback pared gains with DXY index settling lower at 97.14, from 97.27 late last week. While market is now almost fully pricing in a Jun Fed hike (97.8% indicated by Fed funds futures trading), players are eyeing any potential delay in the subsequent normalizing path, given the recent poor economic data releases, alongside some recent dovish Fed speak as well.
• Malaysia: Bond market closed was for Nuzul Al-quran holiday Monday. To recap, MYR govvies have seen little impact following the ECB meeting and UK election last Friday. Apart from that, there was selective net buying interest, particularly on short dated papers such as MGS Sep’17, GII Oct’18 and Sep’19. In our opinion, players are likely to stay sidelined ahead of FOMC meeting this week.
• Thailand: Bond curve was in a bear-steepening move with yield rising 2-3bps along 5-year tenors and above as both offshore and onshore players booked profit before the conclusion of the 2-day Fed meeting. The market widely anticipates a June hike, so front-end bonds felt net selling pressure from offshore (-Bt2.25 billion Monday). As short-end yields rose less than 1bp and sell-off in short-term govvies looked laggard due to pent-up pressures from asset managers (via Public Debt Restructuring and Domestic Bond Market Development Fund or PDDF due on Jun 16 amounting  Bt162 billion) we believe LB196A and those with lower maturity will be firmly above 1.5%.
• Indonesia: IDR bonds closed mixed Monday with local and foreign players buying in 3- and 15-year papers, while few local names were on net selling mode (along 5- and 20-year tenors). We believe interest was mostly driven by short covering especially on 10-year tenors. Market volume fell to IDR9.49 trillion and dominated by bonds maturing in over 10 years (39%) and bonds maturing in between 1 and 5 years (31%).