Thursday, May 21, 2015

CIMB Daily Fixed Income Commentary - 21 May 2015



Market Roundup
  • US Treasuries strengthened on the back of a dovish FOMC minutes, pairing with some buying-on-dips interest on Wednesday. The latest FOMC minutes showed that majority policymakers were not convinced by the current conditions for a rate hike in June, as “the recent domestic economic developments had increased uncertainty regarding the economic outlook, while continued to see potential downside risks from foreign economic and financial developments”.
  • Ringgit denominated government bond market was pretty quiet on Wednesday, with trading volume totalling RM1.4 billion, dominated by flows among GII papers. We think that players are waiting for cue from the FOMC minutes release, alongside the Friday’s CPI number.
  • Thai sovereign bonds closed mixed, amid better buyers seen along the both ends of the curve, coupling with some selling activities across the bellies. Elsewhere, foreign players net sold Bt876 million on Wednesday.
  • IDR government bond market traded lower on Wednesday due to weakened US Treasuries. Market was opened softer with wider bid/offer spread, defensive bid seen in the whole day while offer side was not following. Trading activity remained focus on benchmark series particularly in FR69 and FR68, while volume eased to IDR 8.2 trillion only.
  • Asian credits were held steady during mid-week, with gains seen across some newly issued papers. Huawei May’25 held unchanged at T+176bps, and Agile 5NC3 maturing 2020 tightened from 8.87% to 8.80%.

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