FW: CIMB Daily Fixed Income Commentary - 12 Sep 2017 - TH & ID bonds firm amid offshore interest

 

Market Roundup

• US Treasuries weakened on the back of improved risk appetite, with DJIA closing higher at 22057 amid easing worries over Hurricane Irma early the week. Due to the lower weather-related concerns, while uncertainties (balance sheet reduction and Fed chair candidate selection later this year) over the Fed remain intact, futures trading is now pricing 35.2% probability of a Dec hike, compared to 26.8% registered last Friday. Upcoming data on tap will be inflation, retail sales and industrial production over.
• Malaysia: MYR sovereign bonds closed mixed, taking a breather after late last week strengthening momentum. We noted some profit taking activities among short dated off-the-run papers, supporting USD/MYR near 4.2000 on Monday. On the flipside, industrial production was upbeat at +6.1% yoy in Jul, above consensus +5.1% and prior month +4.0% yoy, but made little impact to spur demand in MYR bonds.
• Thailand: Thai bond curve adjusted higher about 1-2bps at the mid and back of the curve in tandem with UST as risk appetite increased Monday. Meantime, front-ends demand from offshore investors remained solid with Bt11.63 net buying position followed by Bt5.47 billion net buy position in longer term bond after the news that secretary at the MoF called the BoT to cut policy rate. Overall market activities were relatively quiet with lower outright volume at Bt73.58 billion in light global event week and the market still closely monitored Korean situation which will be highly sensitive with the coming announcement of new sanctions against North Korea by the UN. Moreover, local players will wait and see the PDMO dialogue for fiscal year 2018.
• Indonesia: IDR bonds traded higher on foreign buying interest. The trading remained focus on benchmark series especially 10-year tenors. However, profit taking flows halted the advance and erased the morning's gain. The government will hold sharia bond auction today with IDR5 trillion target issuance. We believe demand will be solid as liquidity still ample. Market volume decreased to IDR22.96 trillion whilst trades were equally distributed across tenors.

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