MGS and GII yields displayed mixed movements this week, ranging between -3.5 bps to 0.5 bps overall. The 10-year MGS fell by 1.7 bps to 3.729% while the 10-year GII declined by 1.3bps to 3.770%.

The decline in the 10-year MGS yield can be partly attributed to favourable domestic conditions, including stable unemployment rates, robust retail sales, and strong IPI data. Additionally, Harris's strong showing in the presidential debate has reduced the likelihood of a Trump victory, while signs of a continued slowdown in the US labour market have enhanced the appeal of local bonds to foreign investors.

The house anticipates further declines in domestic bond yields next week, influenced by the upcoming US FOMC meeting, where a 25 bps rate cut is expected. Continued improvements in domestic macro could also exert downward pressure on yields due to increased foreign investment. Additionally, a stable OPR in a global environment of rate cuts could bolster demand for local bonds, contributing to further reduction in yields.