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Fed Pivot Hopes to Turbocharge Southeast Asia’s Curve Flattening
Southeast Asia’s longer-dated bonds have been the winning trade as the region’s yield curve flattened, and there are signs to suggest that the bet will remain profitable. Hopes of a US policy pivot may provide a tailwind to long-end notes while shorter maturities are buffeted by expectations that regional interest rates will remain high. The gap between Indonesia’s two- and 10-year yields is at a multi-year low while the spreads for Malaysia and Thailand have also narrowed. Global notes have bounced back after nursing a three-month loss as traders double down on wagers that the Federal Reserve may start to cut ... (full story)