CIMB Daily Fixed Income Commentary - 16 Mar 2016

Market Roundup

• US Treasury yields fell in the early session Tuesday, reacting to the soft retail sales number and lower oil prices, but yields eventually climbed and closed marginally higher. We think that sentiment was relatively cautious ahead of the FOMC meeting.
• USD/JPY slipped after the BoJ decided to maintain its easing measures at current pace, but speculation of further stimulus amid its warning of gloomier growth outlook. Aside, EUR/USD moved in narrow range between 1.1080-1.1120 on Tuesday.
• Malaysian government bonds closed mixed amid thin selling pressure in conjunction with a weaker Ringgit and crude oil on Tuesday. Apart from that, we think that players were also trimming positions ahead of the FOMC meeting.
• Thai sovereign yield curve ended flatter in line with overnight UST movement. Meanwhile, flows remained decent at Bt24.0 billion, though lower than Bt26.2 billion earlier this week.
• The Indonesian government bond market was pretty much supported on the back of good Feb trade surplus data ($1,136 million against expected $100 million and prior figure of $51 million), albeit market sentiment felt weaker ahead of the BoJ rate decision and FOMC meeting this week. During the bond auction, MoF upsized the issuance by IDR4.2 trillion to IDR16.2 trillion after receiving incoming bids over IDR20 trillion (IDR22.08 trillion). Supporting bids appeared post-auction result announcement, with buyers still lurking especially on auctioned bonds from 15-year and longer. Next highlight will be this Thursday's BI rate decision, where market expects BI rate cut by 25 bps (according to Bloomberg survey). Market volume halved to IDR7.7 trillion.
• Asian credits were dealt wider, as sentiment turned weaker on the back of lower crude oil prices, and weaker economic outlook given by BoJ.The iTraxx Asia ex-Japan IG Index closed 1bp wider Tuesday.