CIMB Daily Fixed Income Commentary - 19 November 2014

Market Roundup

• US Treasuries strengthened amid Middle East tension, following the shock attack in Jerusalem, which caused four deaths over the incident.
• Malaysian government bonds recorded thin trading with volume totalling rising to RM1.8 billion on Tuesday versus RM1.0 billion on Monday and average of RM2.4 billion per day the week before. This caused little change in yields though there were hints of mostly offer action during the day. Not helping was the Ringgit levels with USD/MYR hovering around 3.3595 late Tuesday against 3.3480 the day before amidst the firm US dollar. Meantime, there was pressure along the bills side seeing the weak Ringgit.
• Thai government bonds were supported on Tuesday whist the Thai currency was firm vis-à-vis the firm US dollar. USD/THB was spotted around 32.77 late Tuesday versus 32.79 the day before. Demand for government bonds were additionally supported after Monday’s release of weaker than anticipated 3Q2014 GDP data.
• Indonesian government yield curve shifted down amid positive sentiment caused by the IDR2,000 fuel price hike decision by the president. The market was under biddish tone on opening with buying interest mainly seen along the 15-year to 20-yearr buckets. Shorter dated bonds followed suit with FR69 (5-year) and ORI11 (3-yearr) leading the way. Bank Indonesia held a special meeting Tuesday in response to the fuel price hike and decided to increase the policy rate by 25bps to 7.75% while deposit facility rate unchanged at 5.75%. BI sees current account deficit of USD24 billion by end of 2014 (or around 3% of GDP).
• Some net buying interest was noted along Asian dollar credits on Tuesday, though most action probably slanted along newer bonds. Malaysian names seen about 1bp tighter.