CIMB Daily Fixed Income Commentary - 29 Mar 2016

Market Roundup

• US Treasuries posted mild gains on the back of soft economic data. PCE core deflator posted mom decrease of 0.1% in Feb but meeting expectations. Meanwhile, personal income grew 0.2% in Feb, down from 0.5% the previous month but above consensus of 0.1%.
• We await this week’s important Mar non-farm payrolls data and ISM manufacturing indicators. Last week, the 4Q2015 GDP was revised upward to +1.4% versus the advance estimate of 0.7% and the second estimate of 1.0%. Major driver for the upward revision in 4Q2015 GDP was personal consumption expenditure (PCE) – this was revised upward to +2.4% against +2.0% prior estimate. Having moved away from prior support of 1.82%, and with NFP coming up, it looks increasingly likely the 10T will re-test 2.00%. Breaking the 2.00% will see next resistance at 2.05% and 2.12%. Consensus forecast for Mar NFP is +208k but lower versus +242k in Feb.
• Trading activities remained muted in Malaysian sovereign bond market early in the week, with daily transaction totalling RM666 million. On the flipside, Bank Negara announced reopening auction for the 15-year MGS, which comes at a size of RM2.5 billion. WI was last seen at 4.30/20%.
• Thai govvies strengthened a tad, recovering losses posted late last week. We expect only marginal gains for govvies this week, following dovish signals from BoT and ahead of major incoming data (including another anticipated reading of yoy deflation).
• Indonesian govvies drifted lower in a quiet market ahead of this week’s bond auction. Prices fell on the 10-year FR56 and 15-yearr FR73 benchmark bonds, with those 2 series will be auctioned along with 20-year FR72 and 12m SPN bill. We think the auction demand will be solid, somewhat similar to last auction, if not more. Market volume decreased to IDR8.8 trillion.