Friday, August 18, 2017

FW: CIMB Daily Fixed Income Commentary - 18 Aug 2017 - More White House noise / Regional bonds firm / Fitch affirms Malaysia's A-(Stable)

 

Market Roundup

  • US Treasuries continued to gain, this time amid further White House problems (National Economic Council Director Gary Cohn rumored to resign), and news of a terrorist attack in Barcelona, as well as weak to decent economic data. Data-wise, US industrial production missed expectation to grow 0.2% in Jul against +0.3% consensus (+0.4% in Jun) whilst the Philadelphia Fed index fell to a reading of 18.9 in Aug from 19.5 Jul. The weak numbers added on to recent doubts over growth and reflected the latest FOMC minutes which showed policymakers' mixed view on policy direction. Upcoming highlight will be on Fed's Jackson Hole's event scheduled on 24-26 Aug.
  • On Thursday, MYR opened 40 pips better than the previous day's close following the FOMC minutes inspired USD declines. Early USD weakness pushed MYR to within touching distance of 4.2900, which was then followed by a pull-back after some USD buying. Thereafter with little news to drive markets, MYR remained within a trading range both sides of 4.2930. The open of London trading saw the Euro moving down in two successive moves after technical levels were breached and setting off Euro sell orders. MYR weakened towards the day's lows to 4.2950 with the USD extending its early London gains.
  • Malaysia: Malaysian sovereign yield curve flattened with gains slanted towards the front end of the curve, tracking the positive movement in overnight UST driven by the release of less-hawkish FOMC meeting minutes.
  • Overnight, Fitch indicated it has affirmed Malaysia's sovereign rating at A- with Stable outlook. Fitch said the rating is primarily supported by strong GDP growth, current account surplus but constrained by per capita GDP and governance indicators https://www.fitchratings.com/site/pr/1027939. The Fitch rating action follows this week's Moody's positive comments on Malaysia's rating (A3, Stable) https://www.moodys.com/research/Moodys-Malaysias-credit-profile-relatively-resilient-despite-external-vulnerabilities--PR_371333.
  • Thailand: As with UST movement, Thai bonds gained in a bull-flattening pattern amid choppy trade after UST rose from increasing political risks and dovish Fed minutes. Yields fell across the curve with 2-5bps falling in the intermediates and long-ends mainly aided by local buyers who also bid short-term govvies maturing no longer than 3 months and yields inched 5bps lower Thursday. On the other hand, foreign investors took profit in short-term bonds at Bt2.46 billion for a second day causing net-sell position of Bt2.23 billion.
  • Indonesia: Closed Thursday as Indonesians celebrated Independence Day.



*******************************************************************************************************************************************

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Related Posts with Thumbnails