CIMB Daily Fixed Income Commentary - 08 Mar 2016

Market Roundup

• US Treasuries further weakened, reacting to gains in stock markets and crude oil prices. Brent crude oil trended higher and closed at $40.84/bbl, the highest level since last Dec. According to news reports, OPEC officials were privately discussing setting a $50/bbl price floor though no target time frame is known.
• USD/JPY remained in consolidation, and was pared lower to 113.32, after reaching the higher range above 114.00 late last week. Top side remains at 114.50 in the near term. Elsewhere, EUR/USD hovered at 1.1000. We think it may continue to trade in sideways well ahead of ECB meeting slated for 10 Mar.
• Ringgit govvies posted little gains, along with IRS curve inching lower by about 1bp on Monday. Trading activities remained slanted toward short and medium term papers, while we saw relatively heavier interest on GII papers, namely GII May’18, Nov’17 and Oct’25.
• Thai govvies stood on stronger footing. Flows concentrated on the front and bellies of the curve, including LB196A, LB21DA and LB25DA. Upcoming focus will be on the Bt10 billion LB666A auction slated for 9 Mar.
• Indonesia’s government bond market rallied as Rupiah gapped higher to trade at 12,980 on open, yield curve went down by 20-30 bps in the morning session. However, profit taking action following IDR spot movement erased the morning's gain. We maintain the view that market will reconsolidate and prone to profit taking. Market volume decreased to IDR13.9 trillion.