Malaysia: On Thursday, sovereign bonds tracked prior UST strength. Focus was on the RM3.0 billion 7-year MGS reopening (there was additional RM1.0 billion private placement), which garnered firm demand. Po

Market Roundup

• US Treasuries weakened with the yield curve steepening, following European bond declines (amid strong economic growth prospects and hawkish ECB), though players shrugged aside weak ADP data. On the other hand, the ISM services index unexpectedly rose to a reading of 57.4 in Jun from 56.9 in May and beating consensus expectation of a drop to 56.5. The ADP data showed a decline to +158k in Jun against +188k consensus.
• USD weaker against EUR after Euro Zone bonds showed a rise in yields in the past few days whilst traders also took note of weak ADP numbers ahead of Friday’s NFP release. However, USD bears shrugged aside stronger than expected ISM non-manufacturing data. On the flipside, Asian currencies weaker against USD on Thursday amid reports suggesting US and South Korea conducted ballistic missile tests.
• Malaysia: On Thursday, sovereign bonds tracked prior UST strength. Focus was on the RM3.0 billion 7-year MGS reopening (there was additional RM1.0 billion private placement), which garnered firm demand. Post auction, we noted the 7-year MGS held steadily at 3.91-92%. Expect market to come under pressure after overnight UST weakness though players await US NFP and next week’s MPC meeting. We foresee Bank Negara maintaining OPR at 3.00% this time.
• Thailand: Thai govvies fluctuated in a tight range as the market waited US jobs data. Market color was focused on BoT bond CB17725A maturing in 14 days as it was significantly low at 1.196%, compared with policy rate at 1.50%. In addition to light supply of short-term CB, demand was bolstered by local asset management companies. Also, foreign investors bought short-term bonds at Bt203 million for the first time this week while they sold long-term bonds at Bt1.14 billion.
• Indonesia: Bonds opened firmer and traded sideways in the morning session on Thursday. However on London open market sharply turned. It seemed the selling action was done mainly by foreign names, in line with weaker IDR. Locals placed defensive bids with small volume. Market closed with yield curve up by 13-18bps. Total volume increased to IDR20.9 trillion and centered on bonds maturing in 5-10 years (34%) and also in over 10 years (36%).