CIMB Daily Fixed Income Commentary - 05 September 2014

Market Roundup

• US Treasuries posted losses, following series of decent economic numbers, despite the ADP figure came a tad lower than expected at 204k in August, compared to 220k projected. Market remained cautious well ahead of Friday’s nonfarm payroll release. Week-on-week, 10T and 30T yields rose by 11 and 13bps.
• MGS benchmark yields inched lower by 1-2bps along the curve, amid muted market on Thursday, as sentiment remained cautious, contained by the 3-year MGS reopening, and Friday’s nonfarm payroll number. Elsewhere, WI for the 3-year MGS was left untraded at 3.54/51%.
• THB denominated government bond yields inched lower along the curve, as the improved consumer confidence reading of 70.1 for the month of August made little impact to the market. Market remained cautious and seen with weak trading interest, particularly along the domestic players, despite the daily transaction rose a tad higher from Bt7.3 to Bt9.1 billion. LB196A and LB236A were traded 2bps lower and closed at 3.02% and 3.50% respectively.
• IDR denominated government bonds still firmed on Thursday. Local and especially foreign players kept showing their net buying interest, supported the strengthening trend. The market focused on the benchmark series, which were 15-year FR71, 10-year FR70, 20-year FR68, and 5-year FR69. These four bonds led the market with share of around 80% of total volume on the day. Although the market booked gains, rupiah exchange rate was relatively stable and tended to be higher than IDR11,700.
• New issues in dollar credit market were traded tighter in secondary trading, despite the primary market had been pretty active over the last few days. Haitong 5-year paper tightened by 10bps from the issued spread of 255bps a day before, while Industrial and Commercial Bank of China dealt about 10bps tighter from reoffer spread of 225bps.