Wednesday, August 16, 2017

FW: CIMB Daily Fixed Income Commentary - 16 Aug 2017 - Market relief on geopolitics / BoT meeting today / Moody's upbeat on Malaysia


Market Roundup

  • US Treasuries posted losses on the back of dissipating geopolitical tensions between US-North Korea, after North Korea held back firing missiles on Guam as well as firm retail sales data. The ease in tensions exerted pressure on safer haven assets, as the 10T yield climbed and closed at 2.27%, along with 10-year German bund yield rising from 0.404% to 0.43% on Tuesday.
  • Bank of Thailand will be holding monetary policy meeting today. Consensus anticipates the central bank to maintain policy rate at 1.50%.
  • Malaysia: Malaysian sovereign bond market saw thinner flows, as daily volume took a dip from RM2.8 billion to RM2.3 billion on Tuesday. Trading activities remained slanted towards front end of the curve, led by MGS Oct'17, Nov'21 and Sep'22. Elsewhere, USD/MYR continued to be flat and provide little driver to move the MYR bond market. While market appeared to be trading within narrow ranges, we noted mild net buying interest on longer dated off-the-runs papers. Lastly, Moody's comments on Malaysia's very strong credit metrics to sustain the A3 rating should garner some attention for MYR bonds today.
  • Thailand: Thai bonds opened from holiday with extended sell-off after UST came under selling pressure. Rising global yield also caused foreign sell-off in longer than 1-year Thai bonds at Bt1.22 billion and they slightly increased short-term bonds at Bt472 million, reflecting weak auction result of short-term 91-day and 182-day central bank bills (below 1.0x bid-to-cover and wide range of 1.12-1.22%, and 1.26-1.50%, respectively).
  • Indonesia: IndoGBs were still traded in range, market proved to be resilient although Jul trade balance posted a deficit of $271 million from expected surplus $1.125 billion (previous: $1.664 billion). Some net selling activities were seen in the afternoon session on 7-10 year tenors. However, bids were still strong until market closed. Volume decreased to IDR12.9 trillion and dominated by bonds maturing in between 1 and 5 years (36%) and bonds maturing in over 10 years (36%).


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