US Treasury yields dipped across the curve, in conjunction with lower German bund yields. This came after the ECB sounded dovish and held rates uncha

Market Roundup

• US Treasury yields dipped across the curve, in conjunction with lower German bund yields. This came after the ECB sounded dovish and held rates unchanged at its latest meeting, despite markets generally expecting more hawkish signals from the central bank earlier. The 10-year German bund yield fell from 0.53% to 0.506% ahead of last weekend.
• Malaysia: Ringgit govvies strengthened on Friday. Sentiment was aided by ECB sounding on the dovish side as the central bank held interest rates. Meantime, foreign reserves inched up from $98.9 billion to $99.1 billion as at 14 Jul. Highlight will be on the FOMC meeting slated for 26 Jul. Markets generally expect Fed to stay pat on rates, given the fact that US inflation remains unimpressive, coupled with Yellen’s recent dovish remarks. We see upside to MYR yields to be limited in the near term but focus remains on central banks forward guidance with FOMC meeting this week.
• Thailand: Bonds rallied in a bull flattening pattern catching up with UST amid political tensions around Trump that is interpreted to delay fiscal stimulus and decreasing chance of a quick Fed rate hike. Along the bellies of the curve, LB296A and LB316A outperformed (down 3-4bps) and foreign players continued to buy into longer than 1-year bonds (+Bt72 million). Meanwhile, short-end bonds continued to gain possibly due to the support from local players even as foreign investors took profit for a second consecutive day (about Bt1.56 billion). As valuation for the front-end looks rich at this moment, we expect this week’s auction of 19-year LB366A to be easily absorbed.
• Indonesia: IndoGBs bull flattened on Friday on the back of buying flows after ECB and BI meeting, where ECB kept rate unchanged and asset buying program remains the same, followed by BI keeping the 7-day reverse repo unchanged. With key risk events in the rearview mirror, basically it's risk-on mode. Buyers were especially interested to collect bonds tenured above 10 years, with most transactions dominated by 15- and 20-year benchmark bonds. Market biddish from open until close.