CIMB Daily Fixed Income Commentary - 15 May 2015

Market Roundup

• US Treasuries dealt firmer alongside the gains in German Bunds, after the ECB President Mario Draghi pointed that the QE stimulus will be continued as it helps to boost growth in the Eurozone’s recovery. On the macro front, producer price dipped by 0.4% on a month-on-month basis, below 0.1% growth forecasted by economists. The soft reading also aided to push the US Treasuries higher, due to the slower inflation expectation.
• Malaysian government bonds were mixed in lieu of more market drivers, but the day was highlighted by better-than-expected auction for the new 3-year GII (GII May’18). Supported by spill over demand for the new 3-year GII, we noted late buying interest onto the shorter end of the MGS curve.
• Thailand’s government bonds closed Thursday within a tight range despite another day of relatively heavy net selling activity by foreign players. Data show that foreign players were net sellers of Bt2.7 billion of Thai bonds Thursday, following from net sell of Bt3.7 billion the day before. We think sentiment remain cautious ahead of next Monday’s 1Q2015 GDP release.
• The Indonesian bond market was closed for public holiday.
• Asian dollar bonds closed pretty steadily in spite of the ongoing sell down in global bond markets. However, HY sovereign bonds were affected by the global sentiment. In any case, overall sentiment was aided by continued demand for newer issued bonds, such as those of Huawei, China General Nuclear and Hsin Chong Construction saw spreads tighter by 5-10bps.