CIMB Daily Fixed Income Commentary - 08 Jul 2015

Market Roundup

• US Treasury yields dipped further on Tuesday. Despite that, buying interest eased as players stayed at the sidelines, while monitoring the progress of meeting held between Greek and Euro authorities. News reported that Eurozone leaders had given the Greek government a deadline on Sunday to resolve the debt crisis.
• Ringgit govvies remained under pressure on Tuesday, dragged by weak sentiment, as USD/MYR continued to hover above the psychological level of 3.8000. Despite that, we noted some buying interest on selective short and medium term papers, possibly due to defensive strategy amid volatile market.
• Thai government bond market remained quiet, despite trading volume edged higher from Bt8.2 billion to Bt9.5 billion on Tuesday. Meantime, sovereign yield curve ended marginally steeper, as the shorter dated papers continued to be absorbed by players amid cautious sentiment.
• Indonesia government bond market weakened on auction day. Market traded down post-auction result despite strong incoming bid on auction, as government upsized by 50% from IDR10 trillion initial target. Newly issued 20-year FR72 was long-tailed, with bid-to-cover ratio 1.14x for that series (incoming bid IDR9 trillion), sending yield curve up on average by 10bps. We see market to experience downward pressure due to additional supply from auction, however we expect to see bottom fishing from market players. Meantime, volume improved to IDR13.9 trillion.
• Asian credit market weakened amid increasing Greek tension, ahead of the meeting between Eurozone leaders and Greek Prime Minister Alexis Tsipras slated for Tuesday. Apart from that, stock market declines in China and HK also weighed on the risk-off sentiment.