CIMB Daily Fixed Income Commentary - 08 July 2014

Market Roundup

• US Treasury yield curve flattened, as players showed buying interest along the long end after seeing the yields surged substantially over the week. Meanwhile, short end yields appeared to be relatively stable at this juncture.
• Muted sovereign bond market on Monday, as trading volume shrank drastically to RM303 million, while yields were pretty unchanged amid quiet market. Overall, long dated GII Aug’33 was actively transacted amounting RM120million, while stood firm at 4.62%. On the other hand, we saw bills market pretty active with the participation of offshore players, as players were seen playing defensively at this juncture.
• Thai sovereign yield curve flattened, as players continued to show buying interest along the long end, while shorter end yields surged a tad higher. Meanwhile, trading volume declined from Bt14.3 billion to Bt10.6 billion on Monday. Market focus was along the curve belly, which included LB196A and LB236A.
• IDR denominated government bond market moved slightly in positive area on Monday. Meantime, rupiah also strengthening although we also saw intervention from Bank Indonesia. However, the market still took less aggressive stance as volume was moderate about IDR7.28 trillion, led by 10-year FR70 totaling IDR1.28 trillion and several off-the-run papers such as 7-year FR53 and SPN series, while other series were dealt thinly. Trading activities may keep be thinner ahead of presidential election.
• Asian dollar credit market was relatively quiet, as investors were awaiting for market guidance from US market. To recap, US market closed on last Friday’s Independence Day. Market sentiment remained steady, as China Overseas May’24 was seen 1bp tighter to 282bps, while Citic Pacific perps was quoted 0.05pt higher to 114.50pts on Monday.