CIMB MYR and USD Weekly Fixed Income Commentary for 15 May 2015

Market Roundup

• Ringgit denominated government bonds recovered losses posted earlier in the week, which were driven by the sell-off in global bond markets. Also, players were seen staying on the sidelines heading toward the 1Q2015 GDP release on Friday, providing little support to the government bond market. Ahead of the weekend, support for Ringgit govvies came in from the strong 3-year GII auction and the release of slightly better-than-expected 1Q2015 GDP data.
• We expect a sideways rangebound movement along the MGS segment this week, and will mainly watch direction from UST and Ringgit movements. Resistance for the 10-year MGS remains 3.98%.
• Flows along the Ringgit corporate bond market remained heavy, led by interest along mid- to long-dated quasi and AAA rated papers. We saw firm demand on Cagamas, Danainfra, PLUS, Telekom, and Suria KLCC tranches. On the flip side, AA1 YTL Power and AA- Malakoff Power also garnered decent bidding interest amid the bullish tone.
• Ringgit IRS inched higher across the curve for the week ended May 15. Earlier the week, the rates were sent higher alongside the sell-off in global bond markets. However, we noted that the rates eased lower following firm auction result for the new 3-year GII and positive 1Q2015 GDP number.
• US Treasuries posted decent gains along the front and bellies of the yield curve but longer term papers still weakened. Support came with weak US economic data and alongside gains along 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.
• Asian dollar credits tightened amid rising UST yields, while risk sentiment was well supported by the recent rate cut in China, alongside the firm demand in primary deals..
• We've attached data for the CIMB Bond Index for the month April 2015.