CIMB Daily Fixed Income Commentary - 02 July 2014

Market Roundup

• US Treasury yield curve steepened, as players were seen taking profit ahead of job data released this week, with the anticipation of stronger job data, alongside the economic data releases which came in a tad lower on Tuesday.
• MGS yields dipped marginally along the curve, amid relatively heavier flows seen on Tuesday, compared to the past few weeks. Aside, foreign players showed better buying interest, amid stronger Ringgit.
• Thai bond market closed on Mid-year Holiday.
• IDR denominated government bond market gained on Tuesday as trade balance showed better than estimated figure. Trade balance in May recorded surplus about USD70 million, whilst most of economists had anticipated a deficit. Meantime, inflation rate was slower in June about +6.7% YoY from +7.32% YoY previously. The positive movement was in accordance with rupiah strengthening on the day. Although the market firmed, transactions were thinner with volume of IDR5.19 trillion from IDR6.53 trillion in the previous trading day. We see the market may move slightly ahead of presidential election albeit local economy data showed improvement.
• Asian dollar credit market remained muted, and credit spreads were seen hovering at prior levels, due to the inactive market, alongside Hong Kong’s public holiday on Tuesday.