US Treasury yields dipped on the back of subdued economic data releases, awaiting Fed’s rate decision on Wednesday. The May inflation declined by 0.1% mom, while market expects it to be flat. Retail sales contracted by 0.3% mom in May, down from 0.4% mom expansion a month ago.

Market Roundup

• US Treasury yields dipped on the back of subdued economic data releases, awaiting Fed’s rate decision on Wednesday. The May inflation declined by 0.1% mom, while market expects it to be flat. Retail sales contracted by 0.3% mom in May, down from 0.4% mom expansion a month ago.
• Malaysia: MYR govvies generally were little changed, awaiting FOMC outcome. Highlight was on the 10-year GII reopening auction, which saw healthy demand, as bid-to-cover ratio reached 2.54 times for the RM3 billion issue. Average yield was generated at 4.013%, within spread of 3.991-4.021%. On the other hand, USD/MYR inched lower and settled at 4.2580.
• Thailand: Thai bonds rose ahead of FOMC and foreign players bought both of short-term and long-term bonds. The yield declined by 2-5bps for the bond maturing in 5-year LB21DA and longer dated securities. THB IRS rate saw the similar directional impact that the swap curve shifted 4-5bps lower in the mid- and long-end segments. Mid rate of 3-, 5-, and 10-year THB IRS was traded lower at 1.715%, 1.975%, and 2.35% respectively. Fitch affirms Thailand sovereign credit rating at BBB+ with stable outlook mainly by strength from surplus in current account and sufficient FX reserves. We view that this news can strengthen foreign demand for Thai GB and risk of rising yield would be contained in this period.  
• Indonesia: Indonesian government bond market traded slightly up in line with stronger IDR currency, where USD/IDR traded to 13282 at its lowest. Market felt thin on opening session though, and most of trading was dealt on London open, mostly on benchmark bonds. Market consensus predicts BI to keep 7-days reverse repo rate unchanged at 4.75% on BI meeting. Market volume increased to IDR10.08 trillion and was dominated by bonds maturing in over 10 years (41%).