Friday, August 28, 2015

CIMB Daily Fixed Income Commentary - 28 Aug 2015


Market Roundup
  • US Treasury yields only managed to inch higher, despite the improved risk-on sentiment following the gains in stock market, decent economic releases and sharp rebound in crude oil prices on Thursday. Crude oil recovered substantially and settled higher at $47.56/bbl, compared to $43.14/bbl a day ago.
  • Malaysian sovereign bonds suffered losses, despite the MYR recovered some on the heels of higher crude oil prices. Highlight was on theRM3 billion 10-year MGS reopening auction, which ended with decent bid-cover ratio of 2.03 times, while average yield stopped at 4.453%, near to the prior day close at 4.44%.
  • Thai govvies posted gains, on the back of weak economic releases. July customs exports fell by a smaller margin of 3.56% (vs 7.87% in Jun), while customs imports shrank substantially by 12.73% (vs 0.21% in Jun). Aside, daily volume declined drastically from Bt23.6 billion to Bt16.8 billion on Thursday.
  • Indonesia government bond market rallied on positive sentiment driven by government announcement to launch economic stimulus plan. Both local & foreign names were seen buying today, with FR70 (10-year) benchmark series dominated the market today. Government decides to give tax holidays to new companies investing at least IDR 1 trillion, this tax holidays plan is seen as an 'appetizer' part of a big stimulus plan. We think market will digest the stimulus package as it is too early to conclude the effectiveness of the stimulus plan. Volume improved to IDR 14.4 trillion.
  • Asian credits ended tighter amid choppy trading, guided by improved bidding interest and short-covering following the gains in stock markets. Oil-related papers such as Petronas and PTTEP were quoted tighter, driven by the recovery in crude oil prices. Notably, regional CDS spreads tightened by 6-16bps on Thursday.

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