Fixed Income Daily Pulse, 13 Aug 2015

The day’s trade recap (from our trading desk):

·  A see-saw day for USD/MYR and bonds today as USD/MYR opened below 4.00 but rose up to 4.02 level before coming back down below 4.00 again after Malaysian year-on-year GDP (4.90% vs 4.50% forecast)  and current account surplus rose more than expected (7.6b vs 6.1b) came out better than analyst forecasts. However, the joy was short lived as it was biddish again in the afternoon session pushing USD/MYR to close around 4.01. Local govvies shared the same fate with the market showing good bidding interest in the morning pushing the 7-year MGS yield down as much as 9 bps before being sold during the afternoon session to close only 2 bps lower on the day. Similar to the past few days, still seeing foreigners selling off the run bonds but this time on those maturing longer than 5- years while the short ends were more biddish as the offshore implied yields were much lower today prompting some players to put on their carry trades again. GB Services Berhad ‘11/19 increased at 4 bps at 4.27% with a total trading volume of RM20 million. Meanwhile Cagamas Berhad ‘10/18 increased 8 bps to close at 4.00% with RM10 million done. In the AA segment, YTL Power International Berhad ‘08/18 increased 9 bps to close at 4.27% whereas ‘10/24 remained unchanged at 4.73% with a total RM35 million done. Meanwhile, Malaysia Airport Holdings Berhad ‘12/24 increased 4 bps at 5.06% with a total RM30 million traded. MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.440 +1.0 297 5-yr 3.950 0.0 131 7-yr 4.140 -2.0 249 10-yr 4.200 0.0 80 15-yr 4.390 -4.0 103 20-yr 4.500 0.0 0 30-yr 4.770 0.0 0 IRS Closing Rates IRS Closing Yld (%) Chg (bp) 1-yr 3.803 -1.2 3-yr 3.920 -2.5 5-yr 4.080 -3.5 7-yr 4.270 -1.0 10-yr 4.465 -3.5 Source: Bloomberg, AmBank                      Source: BondStream, AmBank

               

  

Local News:

·              Malaysia’s economy grew 4.9% in the second quarter from a year earlier, slightly above market expectations despite lower commodity prices and domestic demand in the period.

·              Malaysia’s current account surplus narrowed to RM7.6 billion in the second quarter from RM10 billion in the first quarter of 2015.