Fixed Income Daily Pulse, 28 Jan 2016

Today’s trade recap by our trading desk:-
·         The FED kept rates unchanged as expected and its statement was slightly dovish, pushing rate hike expectations towards next quarter. The govvies market opened with a bullish tilt, especially on the GII space, with buying concentrated on the 7-10 yr bonds. There was also the 20Y GII reopening with RM2bio issued today at a BTC of 1.915x; Hi 4.678; Lo 4.625; Avg 4.647. The BTC was well within expectation, seeing strong interest from real money accounts in this bond as its yield is still attractive at current levels. PM Najib also announced a budget revision today to optimize the country’s expenditure in the face of a slower economic growth. The revised budget will enable the government to save RM9bil and maintain a fiscal deficit target at 3.1% of GDP. Post announcement, MYR strengthen towards the 4.20 level. Bond yields remained largely unchanged for the day as the market has somewhat priced in this budget revision already.
Malaysia Government Bonds Benchmark Issues MGS Closing Level (%) Change (bp) Volume (RM m) 3-yr 3.230 +0.5 154 5-yr 3.380 +2.5 292 7-yr 3.660 -4.0 371 10-yr 3.865 -1.5 264 15-yr 4.310 +2.0 0 20-yr 4.565 - - 30-yr 4.770 +1.5 0 Source: BondStream, AmBank	Interest Rate Swap Closing Rates IRS Closing Yield (%) Change (bp) 1-yr 3.675 4.5 3-yr 3.700 2.0 5-yr 3.800 1.0 7-yr 3.945 1.5 10-yr 4.150 1.0 Source: Bloomberg, AmBank
Local News:
·         None.