CIMB Daily Fixed Income Commentary - 11 Jun 2015

Market Roundup

• Selling activities continued to overwhelmed dips-buying interest in US Treasuries, following continuous sell-off in German bunds, sending the UST yields higher by 1-6bps during mid-week. The 10-year German bund yield spiked to the intraday-high of 1.05%, the highest level since Sep 2014, before eventually settled lower at 0.98%.
• Ringgit government bonds drew improved bidding interest following the slight recovery in MYR, pairing with firmer crude oil prices. However, sentiment turned bearish in the afternoon session, in conjunction with selling activities in both UST and German bunds, erasing the gains posted earlier.
• Thai sovereign yield curve flattened on Wednesday, amid better buying interest on the front end of curve, due to cautious sentiment heading towards MPC meeting, alongside the volatile UST. Bank of Thailand held the policy rate unchanged at 1.50%, in line with market expectation, while keeping its policy stance accommodative to support the economic growth. Meantime, the central bank stated that the slow-growing economy is exposed to the downside risk of slower-than-expected global economy recovery. In addition, the policymakers projected the headline inflation to be in the negative territory, dragged by the lower energy and raw food prices, but anticipate the inflation to show upticks in the second half of the year.
• IDR government bond market opened lower on going concern over weakening UST. The yield curve traded up by 3-5bps on opening with light selling pressure in the morning. However, market was on more aggressive selling after London market opens, while foreign names were seen on the selling side. Transaction volume halved to IDR 16.6 trillion.
• Asian credits posted losses following the rise in UST yields, as investors were jittered by growing rate hike speculation, after the robust economic data releases lately. High beta Indonesia Jan’45 trended lower from 93.92pts to 93.28pts, while Woori Bank Jun’45 widened by 1bps to 5.12% on mid-week.