CIMB Daily Fixed Income Commentary - 02 Jul 2015

Market Roundup

• US Treasury yields climbed by 4-8bps across the curve, led by positive economic data reported during mid-week, alongside improved risk sentiment with some speculation on the positive outcome for Greek bailout.
• Ringgit govvies strengthened, with bond prices gapped higher after the Fitch Ratings surprisingly revised Malaysia’s outlook from Negative to Stable, while maintaining its rating at A-. Elsewhere, daily volume was heavy and surpassed RM7 billion, led by medium term papers in both MGS and GII spaces.
• Thai bond market closed on Mid-year holiday.
• Indonesia government bond market strengthened on Wednesday with buying flows seen especially along the 10- to 15-year tenors. Foreign banks were aggressive bidding on the benchmark papers and off-the-run bonds on those buckets, while also showing interest to buy papers with 5- to 7-year tenors. Some profit taking seen on London opening, keeping the rally capped at current level. We think bond market is still biddish due to thin supply and persistent buying flows. Aside, volume sharply dropped to IDR12.9 trillion.
• Asian credits ended tighter, despite sentiment was slightly weakened by the Greek debt default. Petrol 25 traded tighter by 4bps to T+124bps, after its credit outlook was revised from Negative to Stable by Fitch Ratings. iTraxx Asia ex-Japan stood unchanged at 114.50bps during mid-week.