CIMB Daily Fixed Income Commentary - 09 May 2014

Good Morning,

Market Roundup

• US Treasuries continued posting gains on the shorter ends, whilst long ends were seen with selling pressure, alongside the weak 30T auction.
• Ringgit government bonds were hovering at prior levels ahead of MPC meeting outcome. Market focus was on the shorter dated papers, which included MGS Sep’15 and Oct’15. Aside we noted buying interest which drove down the yields of GII Mar’21 and May’24 by 2bps each to 4.03% and 4.17%.
• Thai Baht government bond market was seen with thinner transactions as trading volume declined by 16% to THB985 billion on Thursday. Foreign players continued to trim positions due to the concern of possible prolong political impasse following the impeachment of Yingluck as caretaker Prime Minister. However, we noted both local players and asset managers were still supporting the market with net buying of THB10 billion. Market focus was on the benchmarks of the government bond, such as LB176A, LB196A and LB21DA, which eventually drove the yields a tad lower.
• IDR denominated government bond market remained sideways before BI rate announcement. As expected, BI rate was maintained at the same level of 7.50%. We noted yields moved down after the announcement, in line with rupiah strengthening. In general, trading activities were moderate with total volume of IDR6.50 trillion, declining from previous day of IDR10.12 trillion. Some players still favored off-the-run series.
• Asian dollar credits were seen moving in mixed, whilst IG credits were held relatively firm amidst flows of new issues. Baa1 rated China Cinda May’19 traded wider by 5bps to 255bps, whilst A1 rated CNPC May’19 tightened by 5bps from its issued spread of 127.5bps.  Aside, China Resources was heard launching its new issue at 280bps.

Best Regards,
CIMB Fixed Income Research
Corporate Banking, Treasury and Markets
Tel: +603 2261 8888 | Fax: +603 2261 8705
www.cimb.com

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