CIMB Daily Fixed Income Commentary - 19 March 2015

Good Morning,

Market Roundup

• US Treasuries rallied after the FOMC meeting ended with a less-hawkish-than-expected stance on Wednesday. As widely expected, the Fed removed the word “patient” in their interest rate forward guidance. On the other hand, the latest Fed’s quarterly dot plot median reading was lowered to 0.625% by end of 2015, dropped from 1.125% projected in December, implying that the Fed members see interest rates to go higher at a slower pace.
• Ringgit govvies closed mixed, amid some selling pressure after the Fitch Ratings warned on possible downgrade in Malaysia’s credit rating to BBB range, driven by the decline in current account surplus and negative news from 1MDB. USD/MYR peaked at 3.7168, before eventually dropped to 3.7062 late Wednesday.
• THB denominated government bond yields inched lower, supported by the improved buying interest shown by foreign players, who net bought Bt737 million worth of bonds during the mid-week.
• Indonesia government bond market was very quiet, as players stayed at the sidelines ahead of FOMC meeting. However, foreign banks trimmed their position in the eleventh hour, which exerted selling pressure on all the benchmark series, sending yield curve higher. Trading volume improved to IDR 14.34 trillion and the most traded bonds were benchmark FR69 and FR71 that were offered on the latest auction.
• Asian dollar credits closed mixed amid quiet market, as investors remained sidelined well ahead of the FOMC meeting outcome. Meantime, we saw some recovery in Petronas papers, after traded wider in secondary market due to the large sizes. Petronas Mar’25 was quoted 4bps tighter at 163bps.