After ECB neutral policy statement yesterday and no indication on any tapering thus far, the selloff in the local bond market came to a halt today w

Good Evening,
Today’s trade recap by our trading desk:-
·         After ECB neutral policy statement yesterday and no indication on any tapering thus far, the selloff in the local bond market came to a halt today with prices firmer on the belly of the curve. Buying flows were seen in the 7Y and 10Y benchmarks as traded volume picked up today. These buying flows, mainly driven by foreign demand, was sparked by the lower than expected CPI YoY figure at 1.5% vs 1.8% exp. This resulted in yields coming off by 1-2.5bps at the belly while the back end was unchanged. Towards the end of the day, focus was on PM Najib’s speech in the Parliament regarding Malaysia Budget for 2017. Fiscal deficit is seen to be narrowed to 3% of GDP in 2017.
Malaysia Government Bonds Benchmark Issues MGS Closing Level (%) Change (bp) Volume (RM m) 3-yr 3.000 -4.0 60 5-yr 3.330 0.0 30 7-yr 3.540 -2.5 74 10-yr 3.620 -2.0 140 15-yr 4.095 -1.0 0 20-yr 4.335 0.0 37 30-yr 4.580 - - Source: BondStream, AmBank	Interest Rate Swap Closing Rates IRS Closing Yield (%) Change (bp) 1-yr 3.365 +0.0 3-yr 3.430 -1.5 5-yr 3.590 +0.5 7-yr 3.755 +0.5 10-yr 3.995 +1.0 Source: Bloomberg, AmBank
Local News:
Consumer Price Index rose at the same pace of 1.5% y/y in September (+1.5% prior) with the decline in the transport group helps to maintain inflation at a low level. Core inflation, which excludes most volatile items including fresh food and energy prices, rose 2.1% y/y in September (+2.2% prior).