Thailand: Bond curve was in bear-steepening pattern with yield up 2-4bps in the mid- and long-end segment (from 8-year LB25DA to 20-year LB383A). Global bond sell-off was behind the backdrop started by European bonds after the ECB minutes revealed a less dovish tone. Foreign investors were net sel

Market Roundup

• US Treasury yield curve mildly steepened, reacting to the better-than-expected jobs data released Friday. Non-farm payrolls was +222k in Jun, against 178k projected earlier, while unemployment inched up from 4.3% a month ago to 4.4% in Jun, but average hourly earnings only rose by 0.2%, following 0.1% gain in May.
• Malaysia: MYR sovereign bonds posted losses, along with selloff in global bonds, dragged by less-dovish ECB stance indicated in the latest ECB minutes. Malaysia’s exports grew by 32.5% yoy in May, above consensus +23.4% yoy, while imports expanded 30.4% yoy the same month, against expectation of +19.4% yoy. However, these numbers made little impact on sentiment. We expect bonds to remain pressured ahead of MPC meeting, with UST yields higher following the release of firm NFP.
• Elsewhere, foreign players were seen trimming Malaysian govvies by RM0.81 billion in Jun, after being net buyers in the prior two consecutive months. The outflow was driven by a drop in MGS foreign holdings (RM0.9 billion), but GII foreign holding registered a small increase of RM0.09 billion.
• Thailand: Bond curve was in bear-steepening pattern with yield up 2-4bps in the mid- and long-end segment (from 8-year LB25DA to 20-year LB383A). Global bond sell-off was behind the backdrop started by European bonds after the ECB minutes revealed a less dovish tone. Foreign investors were net sellers of longer than 1-year bonds for a third consecutive day (-Bt1.834 billion).
• Indonesia: IndoGBs weakened, triggered by two catalysts: 1) global sell-off due to hawkish ECB meeting minutes and 2) government plans to revise 2017 budget deficit from 2.41% to 2.92% of GDP (borderline approaching 3% limit), or equivalent to additional IDR70 trillion in deficit. Bond market was offerish since open, as foreign names led the selling action while locals put in defensive bids with smallish amount. After London & US waves with US jobs data and bond auction coming up on Tuesday, we expect to see market to find new normal and consolidate. Market volume decreased to IDR15.9 trillion and dominated by bonds maturing in over 10 years (48%).