CIMB Daily Fixed Income Commentary - 04 July 2014

Market Roundup

• Strong NFP data recorded in the month of June, pairing with other positive trade balance figure in May, sent the US Treasury yields higher on Thursday. However, we saw the yields surge was capped by some buying supports, particularly at the longer end. At this juncture, we view that players may show buying-on-dips interest in the near term, due to the substantial fall in Treasury prices.
• Sovereign yield curve inched up, after strengthening over the last two sessions. Aside, trading volume shrank significantly by RM2.0 billion to RN1.7 billion. Market focus was on medium term papers, namely MGS Jul’24, GII Mar’21 and May’24, which were traded in narrow range of 1bp.
• THB denominated bonds further weakened as the market continued to show concern on the sluggish economy, while anticipating higher level of bond issuance by the government, as the Junta chief Prayuth was seen implementing easing strategies to revive the growth after taking over as the governance entity.
• IDR denominated government bond market still moved in narrow range with negative tendency, as there were no fresh drivers to guide the market, while better-than-expected trade balance and stable inflation rate gave temporary positive impact to the market. Moreover, volume moderated totaling IDR8.43 trillion, thinner from previous day of IDR10.80 trillion. Only two series were prominent on the day which included 3-year SR006 and 10-year FR70.
• Asian dollar credit market was seen with decent flows, while China names were relatively active post release of higher HSBC Services PMI reading of 53.1 in June. Among the gainers, KWG Jan’19 was seen traded higher to 103.76pts, from 102.84pts; while China Overseas May’24 tightened by 6bps to 284bps.