CIMB Daily Fixed Income Commentary - 18 Feb 2016

Market Roundup

• US Treasuries extended losses following rebound in crude oil prices and stock market, alongside a pair of stronger-than-expected economic data releases. Brent crude oil closed higher at $34.50/bbl, from $32.18/bbl recorded on Tuesday, after Iran “welcomed” the plan to freeze oil output, but declined to commit to the plan.
• Producer prices rose by 0.1% in Jan, beating consensus estimate of -0.2%. Meantime, industrial production expanded by a faster pace of 0.9%, in contrast to the 0.4% forecasted earlier.
• The tone from the FOMC meeting minutes was generally in line with market expectation, as it highlighted the uncertainty of global economic growth and financial market turmoil, which spurred speculation the Fed may keep its normalization pace slower, or even on hold. On the positive side, most of the FOMC members continued to anticipate that inflation would rise to its 2% target over the medium term period, as the transitory effects of declines in energy and import prices dissipated, along with stronger labour market.
• Ringgit govvies posted mild losses, in conjunction with weaker MYR heading into FOMC minutes release. Market now awaits 4Q GDP for further direction. Consensus sees growth to slow to 4.1%, from 4.7% achieved in the previous quarter.