CIMB Daily Fixed Income Commentary - 08 September 2014

Market Roundup

• US Treasury yield curved ended steeper, as short end yields fell by 2bps, amid better buying activities post release of disappointing August nonfarm payroll data.
• Malaysian govvies ended weaker on Friday, led by selling pressure well ahead of the release of US nonfarm payroll figure. Meanwhile trading volume surged drastically and surpassed RM4 billion, aided by the 3-year MGS reopening auction. Elsewhere, IRS rates were left mostly unchanged at previous levels.
• Long dated Thai government bonds ended weaker amid quiet market, as total trading volume shrank from Bt9.1 billion to Bt6.3 billion. While the trading interest was rather muted, LB196A printed decent volume of Bt2.8 billion, with yield closed higher by 0.5bps to 3.025%. We reckon that the sovereign yields may trade a tad higher amid cautious sentiment ahead of MPC meeting. Similarly, we saw IRS curve steepened on Friday, led by higher IRS rates along the longer end.
• IDR denominated government bonds kept strengthening on Friday, aided by decent fund inflows into the bond market, while yields downed by up to 13bps on the day. In total, govvies were traded significantly amounting IDR16.65 trillion from IDR12.58 trillion previously. This week, we saw large amount of funds went to the market. End of the day, Indonesia foreign currency reserves increased to USD111.2 billion in August from USD110.50 billion in the prior month.
• Asian dollar credits firmed on Friday, boosted by buying interest following the ECB rate cut decision. However, the positive buying activities were limited by the cautious sentiment ahead of the Friday’s US nonfarm payroll release.