CIMB Daily Fixed Income Commentary - 13 Jun 2016

Market Roundup

• US Treasury yields posted another rally last Friday, boosted by gains in Euro Zone bond yields and safe haven bids as equities markets fell and crude oil showed weakness. As we head towards this week’s FOMC meeting and possible revision in the Fed’s macro projections, data on Friday included the University of Michigan consumer sentiment index which fell to a reading of 94.3 in Jun from 94.7 the month before but higher than consensus of 94.0.
• Trading of Malaysian government bonds was pretty active but yields ended mixed. Gyrations in the USD/MYR and lower crude oil on Friday came alongside the mixed MGS movement. MGS yields ended the day 1-2bps around the prior day’s close. Elsewhere, domestic macro data were additionally supporting sentiment in the Malaysian bond market. Malaysia’s industrial production came at an increase of 3.0% yoy in the month of Apr. This is below consensus expectation of +3.5% increase (but higher than +2.8% in Mar). In the coming week, we on have tap the May inflation figures, but is not expected to show a strong number yet in May (consensus is +2.0% yoy versus +2.1% in Apr).
• Thai government bonds managed to add on to recent gains (post NFP release last week), despite USD showing strength across the region after its recent week of weakness. USD/THB was around 35.250 late Friday, up from near 35.10 earlier. Aside, Thailand’s foreign reserves rose to $178.0 billion in the week ended 3 Jun from $176.1 billion the week before.  
• Indonesia government bond market softened on Friday as Dollar index rose. Bonds opened around 25c lower in price, and players welcomed the opportunity to buy on dips (thick bids seen all over benchmark bonds). This coming week should be interesting, with May trade balance to be announced and BI MPC meeting looming, while globally all eyes will be on FOMC meeting. Volume halved to IDR6.58 trillion only and dominated by bonds maturing in over 10 years (70%).