CIMB Daily Fixed Income Commentary - 13 April 2015

Good Morning,

Market Roundup

• US Treasuries ended marginally tighter on Friday, guided by import price decline registered in March. The March data showed a 0.3% contraction, down from a lower revised 0.2 growth marked a month ago.
• Malaysia government bonds were dealt mixed and rangebound on Friday. We think pretty rich valuations limited interest on the govvies, with volume traded was relatively low at just under RM3.0 billion. Also, there was some cautious mood as Bank Negara announced details of the upcoming auction of the new 5-year MGS (MGS Oct’20). Amount up for sale is RM4.0 billion, meeting our earlier expectations. WI trading of the new supply was last heard taken at 3.60%, whilst we also saw the pre-existing 5-year proxy (MGS Oct’19) ending 2bps higher at 3.58% though volume traded was very light. Elsewhere, the 10-year MGS (MGS Sep’25) rose 1bp to 3.87%. We prefer the 10-year GII, which ended the day at 3.99% (also up 1bp).
• Thai Baht government bond trading was cautious on Friday after the recent strong performance, whilst there was a lack of foreign support as foreign investors were large net sellers of Bt4.1 billion of Thai bonds Friday. Yields and swap rates ended the day rangebound. USD/THB ended higher at 32.56 Friday against 32.54 the day before and 32.47 a week prior.
• Indonesia government bond market was traded in range amid quiet market. Most activities were seen on Retail Sukuk 5- and 10-year benchmark bonds. Market participant shifted from 5-year benchmark to the retail Sukuk due to attractive yield. Aside, trading volume was about average amounting IDR 12.73 trillion.
• Asian dollar bonds posted gains amid a rise in risk appetite, alongside better performing regional stock markets as well. There was a boost amid still pretty weak China inflation numbers, which continued to spur expectations of looser monetary policy direction by PBOC going forward. Elsewhere, recent gains in oil prices boosted interest on oil and gas papers, including Chinese O&G names.