CIMB Daily Fixed Income Commentary - 16 February 2015

Good Morning,

Market Roundup

• US Treasury yield curve steepened, driven by softer demand for the safe haven assets, after the ECB extended funding limit by EUR5 billion for the Greek banks, coupled with the ceasefire agreement in between Ukraine and Russia.
• Active trading along Ringgit denominated government bonds ahead of weekend, as daily volume amounted to RM5.3 billion. We noted decent two-way-flows, with better buyers along the shorter dated papers, amid rebound in crude oil prices. By late Friday, USD/MYR was seen near 3.5770 as Brent reached the $60.00/bbl level on speculation of spending cuts by global oil companies.
• Thai sovereign yield curve continued trending upward, alongside the arising IRS rates on Friday. Short dated bonds were seen better supported, as players preferred to stay defensive to keep the portfolio duration shorter amid the weakening government bonds. While we still see decent selling interest at this moment, we think that there may be near term correction after the recent substantial upward movement. Suggest buying on dips for further price weakness, with entry level of 2.45-2.50% for the 3-year benchmark.
• IDR government bond market traded up on small buying action done by local names, despite no sizable amount seen. Market was quiet for most of the day, as players preferred to stay at the sideline with bond auction coming up this Monday. MoF is targeting for IDR 12 Trillion issuance this week, which will include auctions for the 10yr FR70 and 20yr FR68 benchmark bonds, and 12m SPN114 bills. Trading volume was average on Friday amounting IDR 13.88 trillion.
• Asian credits held firmer, as sentiment was buoyed by the ceasefire agreement in between Ukraine and Russia, alongside the positive progress on the Greek debt issue. Aside, HY sovereign names rebounded on improved sentiment, with gains led by the long dated Indo Jan’45 and Pertamina May’43.