CIMB Daily Fixed Income Commentary - 02 Jun 2015

Market Roundup

·        US Treasuries weakened with yields up 6bps along the 10-year securities to end the day at 2.18% amid firm economic data. The ISM manufacturing index for May showed a reading of 52.8 against 52.0 earlier consensus estimate and the prior month’s 51.5. Also, US construction spending rose 2.2% mom in April against earlier consensus of 0.8%.
·        The US dollar received a boost from stronger than expected ISM manufacturing number and construction spending data. The dollar has found itself at 124.89 this morning against the yen, from 123.87 closing last week. The dollar index closed overnight at 97.392 from last week’s 96.907. The US dollar rose to its highest level against the yen since the fall of 2002.
·        Ringgit denominated government bond market remained muted amid a lack of market direction. Elsewhere, we noticed some selling pressure on the 7-year GII, which pushed the yield higher by about 2bps to 3.94%.
·        It was a quiet day for Indonesia’s government bond market ahead of the Vesak holiday. Market traded in tight range for the entire day, with some selling flows on the 10-year bucket as a reaction post-CPI data, as May CPI YoY came higher than expectation (7.15% vs 7.01% expected, 6.79% prior), however amount was suspected to be small.  Transaction volume was only IDR5.6 trillion.
·        Asian credits moved in sideways, amid thin trading interest, partially due to Singapore’s absence on Vesak Poya Day. Regional sovereign names dealt mixed, with Vietnam Nov’24 edged lower from 102.14pts to 102.08pts, while Indonesia Jan’25 recovered losses and traded firmer at 99.92pts, from 99.79pts recorded last Friday.