CIMB Daily Fixed Income Commentary - 27 May 2016

Market Roundup

• US Treasuries posted gains but due mostly to buying-in-dips, in conjunction with little correction in crude oil prices and stock market following the recent gains. Aside, Fed Governor Jerome Powell stated that the economy was on “solid footing”, and the policymakers may hike rate “fairly soon, depending on the incoming data and evolving risks”. Elsewhere, macro data were firm. Pending home sales, grew 5.1% mom in Apr against +0.7% consensus, durable goods orders surged by 3.4% in Apr versus upward revised 1.9% but orders ex-transport was just slightly above consensus at 0.4% (0.3% consensus).
• The $28 billion 7T auction garnered firm demand with a bid-cover of 2.57 times, compared to the average 2.49 times registered in previous twelve similar auctions. Meanwhile, high yield stopped at 1.652%, while indirect bidders accounted for 64.6% of the total sales, lower than 65.5% recorded in prior auction. Direct bidders were more strongly felt, ending with 16.9% of the auction against 14.2% in the 7T auction last month.
• Ringgit sovereign bonds were dealt firmer, recovering a tad from earlier losses in the week, as sentiment improved alongside the recovery in MYR. Meantime, the central bank announced the auction details for the new 5-year MGS, with an issuance size of RM4 billion. WI was heard dealt at 3.58/55%.
• Thai govvies continued to show weakness, despite USD/THB edging lower to near 35.60 on Thursday. Meantime, total transaction edged higher from Bt18.2 billion to Bt21.3 billion, led by LB21DA and LB25DA.
• Indonesian government bond market continued the prior day’s momentum, strengthening on the back of foreign net buying flows. Most popular bonds remained the 10-year FR56 and 15-year FR73 (auctioned benchmark bonds), while smaller net buying flows were also seen in 3-year bonds. Volume decreased to IDR9.2 trillion and dominated by bonds maturing in over 10 years (67%).