Fixed Income Daily Pulse, 15 May 2015

The day’s trade recap (from our trading desk):

·        The week started off rather bullish after yields rose towards the end of previous week, with yields easing off at the beginning of the week before rising again mid-week, in line with the rising global yields. The week ended with yields generally easing off apart from some selective long ends on the MGS curve. Trading volume during the week was light. The spread of GII against MGS narrowed for the 3- and 15-year with a range between 4-13 bps along the curve. The 3-year narrowed as the GII rallied when there was a new issuance while local real money was into 15-year GII. Offshore counterparts are still quite decently size in their holdings of our local govvies while local players are speculated to remain heavy in their holdings. Over the GG/AAA segment, PLUS ‘01/27 and ‘01/29 traded mixed to 4.53% and 4.65%, with the trading volume of RM30m. Elsewhere in the AA segment, WCT Holdings ‘04/18 and ‘10/21 traded 4 and 1 bps lower, with RM15m changed hands. Meanwhile, YTL Power ‘11/24 was well bidded, with the yields traded 2 bps lower to 4.81%, with the trading volume of RM20m.    MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.360 -2.0 1 5-yr 3.600 +2.0 77 7-yr 3.780 -4.0 385 10-yr 3.880 -3.0 232 15-yr 4.120 -1.0 3 20-yr 4.200 -3.0 1 30-yr 4.650 -1.0 88 IRS Closing Rates IRS Closing Yld (%) Chg (bp) 1-yr 3.650 -1.0 3-yr 3.705 -1.5 5-yr 3.895 -1.8 7-yr 4.080 -1.5 10-yr 4.256 -1.6 Source: Bloomberg, AmBank

               

  

Local News:

·             Malaysia’s economy posted a growth of 5.6% in the first quarter of 2015 from the corresponding period a year ago, slightly slower than the revised growth of 5.7% in the fourth quarter, but faster than the economists’ consensus of 5.5%. This was driven by the 8.8% growth in private consumption and the 11.7% increase in private investment.

·             Malaysia first quarter current account surplus widened to RM10.0 billion compared with a revised surplus of RM5.7 billion in the previous three months due to the lower deficit in both primary income and services accounts.