CIMB Daily Fixed Income Commentary - 01 Jun 2015

Market Roundup

• US Treasuries marginally gained following the release of soft economic indicators, which were anticipated by market earlier. The 1Q2015 GDP was revised down to a contraction of 0.7% in contrast to the 0.2% growth estimated before. On top of that, weak reports from University of Michigan consumer sentiment (90.7 in May vs 95.9 in April) and Chicago PMI (46.2 in May vs 52.3 in April), also drove the yields lower by end of the month.
• The greenback was able to hold firm against rivals, as market was largely anticipating the weak economic data releases announced on Friday. USD/JPY edged higher from 123.95 and hovered above 124.00. Meantime, EUR/USD inched higher to test 1.1000 on Friday, after rebounding from the low of 1.0873 earlier.
• Ahead of the weekend, we saw some selling pressure in Ringgit govvies as sentiment turned slightly bearish in conjunction with the drop in crude oil prices and a weaker Ringgit. Brent price was about US$63.10 per barrel by late Friday versus US$65.37 per barrel a week previous. Meanwhile, USD/MYR was spotted hovering near 3.6610 Friday versus 3.5842 the week before.
• Thai govvies hovered near prior levels, amid muted trading interest, as daily volume shrank from Bt16.3 billion to Bt10.3 billion on Friday. While we think that short dated papers may continue to see support in the near term, we reckon that players may seek for better value in slightly longer papers, after the yields compression along front end of the curve.
• The Indonesian government bond market was quiet on Friday but with better selling mode. Most players were standing pat on month end and ahead of Monday’s CPI data release. Mixed flows were seen mostly on 10-year benchmark bond. Trading volume improved slightly to IDR 8.1 trillion.
• Asian dollar credits declined, driven by profit-taking activities ahead of the weekend. Investors chose to trim positions and stay on the sidelines, while waiting for more primary deals and new macro data for further guidance.