US Treasuries cautiously strengthened on mostly risk aversion amid mixed US data (and more data coming Thursday and Friday), lower than expected inflation in Eu

Market Roundup

• US Treasuries cautiously strengthened on mostly risk aversion amid mixed US data (and more data coming Thursday and Friday), lower than expected inflation in Europe whilst equities markets fell. The market ended the day down about 1-2bps. The 10T fell below 2.20% for the first time in over a month.
• Malaysia: Malaysian government bonds closed firm but on thin volumes as we go underway into first week of the fasting month and school holidays. MYR testing 4.2900 late Wednesday didn’t help sentiment in the bond market.
• Thailand: Short-end LB19 outperformed with yield down 1bp after BoT announced plans to curb Treasury bills supply. Furthermore, widening surplus in the current account at Bt2.91 billion in Apr propped up gains in the baht with USD/THB intraday low near 34.00. Meanwhile, medium to longer bonds were traded in tight-ranges ahead of fresh drivers. The May inflation report is due today and the market estimates another month of moderate expansion in headline CPI at 0.2% yoy. We view that bonds still have some room for gain from the prospect of softened CPI.
• Indonesia: Market remained sideways due to a lack of catalysts while there was net selling pressure amongst domestic players. In general secondary market was quiet and thin recently but we keep the view market remain resilient especially via the primary market (as players have chance to get better size). Volume improved a tad to IDR9.8 trillion and dominated by bonds maturing in between 1 and 5 years (34%) and maturing in over 10 years (33%).