CIMB Daily Fixed Income Commentary - 03 October 2014

Market Roundup

• US Treasuries pared gains post mid-week rally, well ahead of Friday’s nonfarm payroll release. Market is eyeing on 215k job creation in September, compared to 142k garnered in prior month.
• Ringgit govvies extended gains, guided by the improved buying activities along the medium to long term bonds, while we suspect players are lengthening their portfolio duration, due to consistent buying activities recently. Daily volume remained decent at RM3.2 billion, despite shrank from RM5.0 billion recorded a day before. Elsewhere, trading activities concentrated on the GII May’24 (-1bp), which booked RM1.6 billion worth of volume throughout the day.
• Thai government bonds continued to strengthen on the back on decent buying activities, after several weak economic data released earlier this week. Total trading volumes shrank from Bt25.6 billion to Bt19.4 billion, while the positive movement was capped by profit taking activities. Offshore players continued trimming position, and contributed a total net selling amount of Bt761 million on Thursday.
• Bond market weakened although it experienced going up with yields went down 5-8 bps across the curve on opening due to buying action by foreign banks. Market traded down gradually on more selling and yield on medium to long dated bonds went up surpassing yesterday's level before some bids emerged near closing hours and supported the market.
• Another quite day for Asian dollar credit market, which likely to persist until early next week due to the long holiday in China and Hong Kong. We saw market moved mixed within narrow range, albeit thin liquidity. Bank of Communication 10-year paper traded higher to 99.04pts, from 98.72pts closed on mid-week, while newly issued RHB Oct’19 was seen quoted 4bps wider from issue spread of 130bps on Thursday.