CIMB Daily Fixed Income Commentary - 23 Mar 2016

Market Roundup

• US Treasuries strengthened early Tuesday on the heels of the bombings in Brussels, but weakened following the less-than-dovish comments made by Chicago Fed president Charles Evans who said he expected two rate hikes this year, on the back of his forecast of 2.0-2.5% growth and unemployment rate dipping to 4.75% by end-2016. Evans is usually one of the more dovish Fed officials but holds no vote in the FOMC this year.
• Ringgit govvies posted gains, riding on the firmer Ringgit, as USD/MYR dipped below 4.00, before eventually rose and hovered at 4.00 late Tuesday. Daily volume was heavy at RM4.9 billion. Meantime, WI for the 10-year GII was last heard at 4.120/075%.
• Thai govvies ended weaker, amid profit taking pressure on Tuesday, in line with UST movement. On top of that, we reckon that players were also repositioning ahead of the BoT meeting despite market consensus showing the central bank not shifting interest rates just yet.
• Indonesian government bond market continued its downward movement on Tuesday, as prices went down in thinly traded market, although local buyers were seen bidding in short dated bonds (less than 3-year). MoF held IDR Syariah auction, issuing IDR4.18 trillion of bonds from IDR4 trillion target, with incoming bids reaching IDR10.9 trillion. Market did not react after auction announcement, however buyers on 2-year auctioned bond (PBS9) appeared in the market caused by lower cut-off yield in auction (7.59375%) compared to market. Market volume was steady amounting IDR11.8 trillion.