Long bonds in Southeast Asia are set to outperform shorter-dated notes as policy makers turn more hawkish, turning the curve flattening trade into a hot bet. Bond curves in Malaysia, Thailand, Indonesia, and the Philippines are primed for further flattening as front-end yields rise with rate hike expectations while the longer-end, which remains steep relative to many markets outside the region, eases. While the Treasury two- and 10-year curve inverted this week, the region’s sovereign curves are still steep, even relative to historical averages. Bond curves in other parts of the world have fla…

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