CIMB Daily Fixed Income Commentary - 14 July 2014

Market Roundup

• Global risk-off sentiment sent the US Treasury yields lower by 1-3bps along the curve, with the long dated 30T yield further dipped by 3bps to 3.34%. We reckon that there may be some correction in the near term, due to the consistent gains accumulated over the week.
• The MGS yield curve flattened post the MPC meeting, as players were seen switching from short dated into medium dated bonds. Other than the 5-year MGS auction, market also showed robust buying interest on GII Mar’21 and May’24, pushing the yields lower by 2bps each to 4.05% and 4.19%.
• Thai sovereign yields were held unchanged ahead of weekend, with the exception of the 2-year bond yield, which declined decently by 4bps. Apart from that, trading volume stood steadily at Bt14.6 billion, slightly lower than Bt14.9 billion recorded on Thursday. Transactions were concentrated on the shorter dated bonds, namely LB176A, LB196A and LB21DA. Similarly, IRS rates were seen mainly tracking government bond yields’ movement.
• IDR denominated government bond market pared it gains, yields ended higher especially the benchmark series. After significant positive movement a day before, players tended to take cautious attitude of political sentiments until official announcement on 22 July. The stock market and rupiah also booked losses on the day.
• Asian credit spreads were seen moving in sideways, while newly issued papers attracted better trading interest. China Huarong 3-year and and 5-year tranches widened by 1bp and 3bps each ahead of weekend, while DBS Jul’19 was quoted 1bp to 58bps.