CIMB MYR and USD Weekly Fixed Income Commentary for 03 Jul 2015

Attached is the weekly market highlights for Jul 03, 2015:

Market Roundup

• Malaysian sovereign bonds posted gains with the yield curve shifting lower during the week ended Jul 3, with gains guided by Fitch maintaining Malaysia’s sovereign rating at ‘A-‘ and revising the outlook back to Stable from Negative previously. However, we saw profit taking activities ahead of the US non-farm payrolls report, pairing with cautious sentiment with toppish USD/MYR level at 3.7700.
• In the corporate bonds space, we also noted sideways movement, despite the prevailing tight spreads. We noted that flows were led by bargain hunting interest, while investors started showing better bidding interest, due to a lack of sizeable primary deals. In addition, we expect sentiment to improve, and may see heavier buying interest, after the positive Fitch review, alongside firmer government bonds.
• US Treasuries pared losses ahead of the month end as sentiment were taken apart by the FOMC meeting and the Greek debt debacle. Latest news reported that majority of the Greek voters rejected bailout offer, which is likely to spur selling pressure onto the stock markets, and may benefit US Treasuries in the short term on safe haven flows.
• Dollar credits were dealt firmer heading toward weekend, supported by buying-on-dips interest following early week losses, which were due to the bearish sentiment spurred from Greek default turmoil. Aside, iTraxx ex-Japan IG Index recovered a tad, after widening by up to 6.5bps early the week, and closed 2.5bps higher on a week-on-week basis to 110.5bps.