CIMB Daily Fixed Income Commentary - 31 October 2014

Market Roundup

• US Treasuries recovered some losses, aided by buying-on-dips activities, while sentiment remained weak at this juncture. 10T closed 1bp lower at 2.31%, while our short term target for the 10T is 2.50% by mid-November.
• MGS benchmark yields hovered at prior levels on Thursday, as players did not react on the overnight selloff in US Treasuries. Meanwhile, daily volume increased by about RM900 million to RM2.9 billion, boosted by the 3-year GII auction.
• THB denominated government bond yields further inched up along the belly and far end of the curve, amid weak sentiment. Elsewhere, market saw thinner flows of Bt14.6 billion, against Bt21.0 billion recorded on Wednesday, while market focus was on the short dated LB15DA, which closed 1bp lower at 2.15%.
• Indonesia government bond market traded up following FOMC meeting result, added by MoF's announcement that next week's bond auction target will only be IDR 5 Trillion with 3 series (3m & 12m SPN and 10yr FR70), causing possible limited bond supply for the rest of the year. Offshore inflows were seen especially in long end buckets 15yr and 20yr, while locals seen with buying interest on 3yr-5yr buckets, sending yield down across the curve.
• Asian credits were held firmed on Thursday, albeit the overnight selloff along the short term US Treasuries. Hutchison Whampoa Oct’24 was seen quoted at 135bps, unchanged from prior day’s level, while TATA Motors Oct’24 inched higher from 100.52pts to 100.55pts.