CIMB Daily Fixed Income Commentary - 08 January 2015

Market Roundup

• US Treasuries pared gains, driven by stronger-than-expected economic releases, amid stabilizing oil prices after reaching the recent lows.
• Ringgit denominated government bonds posted losses amid weaker Ringgit, despite better supported post the positive economic releases. November exports expanded by 2.1% YoY, against 0.7% contraction anticipated by consensus. Also, trade balances grew drastically from RM1.15 billion to RM11.13 billion, aided by the flattish imports which garnered a 0.1% YoY gain. On the other hand, trading volume was high, totalling RM4.9 billion, boosted by the 15-year MGS reopening auction.
• Thai sovereign bond market saw heavy trading volume amounted to Bt33.4 billion, while the rally capped by profit taking activities. Elsewhere, the government sold Bt9 billion tworth of LB446A during mid-week, with a decent bid-to-cover ratio of 1.89. Meanwhile, average yield recorded at 3.6917%, in between of the wide range of 3.72-3.64%.
• Quiet day for Indonesia government bond market ahead of Dec14 Fed minutes release. Yield curve generally unchanged except for 5yr bucket where FR69 was quoted at 4bps higher in yield. Most of the trading volume today centered on 10yr and 20yr buckets, with FR65, FR68 and FR70 accounted for almost 47% of total transactions. Total volume was decent amounting IDR 10.7 trillion.
• Along the Asian credits, Vedanta Resources Jan’19 shed 3.79pts to 90.05pts, while Vedanta Jun’21 fell by 4.17pts to 93.00pts, after S&P placed a negative watch on the credits due to weaker cash flow projections caused by the oil price tumble. Meanwhile, Kaisa bonds trended lower at a slower pace, as Kaisa Mar’18 dipped by 0.48pt to 34.04pts, while Kaisa Jan’20 edged lower from 34.53pts to 32.50pts.