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UST yields ended higher WoW, led by the belly and long end. The 2Y yield rose 5bps WoW to 4.14%, though it retraced from an intra-week high of 4.18% after softer June payrolls prompted markets to scale back near-term Fed hike expectations.
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SGS yields also moved higher over the week, broadly tracking the incline in UST yields. The 2Y increased 3bps WoW to 1.58%. while 5 and 10Y increase 9bps and 12 bps respectively to 1.75% and 2.12%.
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The softer June payroll print has reduced near-term risk of a Fed hike, while lower oil prices have also eased inflation concerns. With long-end yields still influenced by term premium and inflation uncertainty, USTs are likely to remain range-bound. Domestically, May trade price data keeps imported cost pressure on the radar. Non-oil import prices rose 4.6% YoY, while non-oil export prices increased 4.7% YoY, suggesting exporter are still able to pass higher input costs through to customers. Attention will shift to May retail sales, with consensus expecting growth of around 6.0% YoY, up from 5.4% in April. We expect SGS yields to remain broadly range-bound with a slight upward bias, tracking UST movements while supported by stable domestic policy expectations.
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