CIMB Daily Fixed Income Commentary - 04 Dec 2015

Market Roundup

• US Treasury yields surged, along with the German bunds, after the ECB conducted a softer-than-expected easing measure, by lowering the deposit rate from -0.2% to -0.3%, and extending the end-date for the monthly bond purchases, without stepping up the size. The 10-year German bund yield leaped by almost 20bps to 0.665%. Meantime, DJIA and DAX downed by 1.42% and 3.58% respectively.
• USD pared gains after the ECB disappointed the market with a softer-than-expected stimulus package. EUR/USD spiked above 1.0900 from below 1.0600, short term resistance at 1.1000.
• Malaysian sovereign bonds were dealt in sideways amid volatile movement in USD/MYR, in conjunction with oil price fluctuation ahead of OPEC meeting. The RM4 billion 5-year MGS reopening auction closed on the back of firm demand, with bid-cover reaching 2.47 times. Average yield stopped at 3.873%, in contrast to 3.82/80% WI level quoted a day ago.

·  Thai govvies hovered near prior levels, amid thin bidding interest seen on the bellies of the curve. Apart from that, trading interest eased ahead of US NFP release, as total daily volume shrank from Bt16.4 billion to Bt11.8 billion.

• Indonesia government bond market traded down as USD/IDR went higher to 13850 on Yellen's comments. In general bond market was quiet, and despite some profit taking/selling action seen on Thursday, support bids still appeared on all tenors. Expect market to be cautious ahead of US jobs data. Market volume dropped to IDR 9.1 trillion only.

·  Asian dollar credits were quoted wider alongside the global stock market decline, following the hawkish statement made by Fed chief Janet Yellen a day prior. iTraxx Asia ex-Japan IG Index closed unchanged at 129bps.