CIMB Daily Fixed Income Commentary - 02 October 2014

Market Roundup

• US Treasuries unexpectedly strengthened, pairing with lower German Bund yields ahead of Thursday ECB monetary policy meeting, in anticipation of further easing measures implementation.
• Malaysian government bonds strengthened on Wednesday, while daily transactions remained heavy around RM5 billion. MGS Feb’15 garnered decent demand and traded 9bps lower to 3.25%, recovered from prior day loss. On the other hand, 10-year MGS and GII papers also in the limelight, and printed a combined volume of RM1 billion throughout the day.
• Thai sovereign bond yields dipped by 1-5bps, triggered by better buying sentiment following the weaker-than-expected CPI number. September inflation eased from 2.09% YoY to 1.75% YoY, a tad lower than consensus view of 1.97%. Elsewhere, trading volume remained heavy, amounted to Bt25.6 billion.
• Bond market traded up despite weak Aug trade deficit data (-$318 Mio vs +124 Mio previous month), foreign buying looks to be behind the bond rally. Market opened higher and settled down a bit before market continued its rally on more buying action in afternoon session.
• Quiet market on mid-week, as traders in both China and Hong Kong were away from desks during the China’s National Day holiday. Meantime, Hana Bank Sep’24 traded tighter to 178bps, as compared to the issue spread of 195bps, while Bank of Communication Oct’24 tightened from the widest spread of 299bps to 297bps.