US Treasuries. UST yield curve bear steepened, tracking selloff in Euro sovereign bonds, driven by profit taking pressure and anticipation of upcoming new supplies. The 10y German bund yield climbed by 2.5bps to 0.41% on Friday, after trading at 1-month-low below 0.33% earlier the week.
Malaysia. Secondary trading in MYR bonds remained cautious despite some buying-on-dips interest emerged. Foreign players showed net buying interest in short dated papers on the back of firmer MYR, but were heard trimming longer dated papers. Meantime, IRS rates edged higher by 2-7bps across the curve on Friday. Apart from that, the central bank announced reopening auction of 10-year GII with an issue size of RM3b. WI was heard quoted at 4.26/25% ahead of weekend.
Thailand. Bond yield curve turned steeper with yield rising across the curve mainly due to foreign sell-off particularly in LB196A, LB206A, LB25DA, and LB26DA. Foreign players substantially book profit for bond maturing longer than 1y at Bt4.19b last Friday. Intermediate segments within 2-9y were the worst performer as yields rose by 2-4bps. At present, price movement signaled market favors steeper curve bias into year end and increasing supply looks negative in higher yield environment. Therefore, there is a tail risk for the auction of new benchmark 5-year LB22DA on November 15 (current yield at 1.87% compared with previous auctioned range of 1.767%-1.778% on September 15).
Indonesia. Bond market was seen with muted trading interest due to the lack of catalyst. Also, players awaited upcoming bond auction, which was indicated with IDR15t target. Overall, IDR government bond market was softer amid thin trading volume.
Asian Dollar Credits. USD credits remained under pressure as investors took profit on the back of disappointing US tax plan unveiled by the Senate. Expect profit taking flows to be sustained, driven by anticipation of more primary deals ahead of year end. Inner Mongolia BaoTou Steel Union and Wing Lung Bank were among the latest potential issuers heard in primary space.
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CIMB Treasury & Markets Research-Fixed Income
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