FW: CIMB Daily Fixed Income Commentary - 13 Sep 2017 - Regional bonds down profit taking

 

Market Roundup

• USD was steady overnight with little impetus either way as markets waited on the next directional cue which would likely come from the inflation numbers slated for Thursday. US Treasury yields rose as tensions eased and risk sentiments returned to markets. The sanctions approved by the UN on Monday and the absence of a missile test over the weekend had eased worries of an escalation and had supported the Dollar and stocks.
• Malaysia: MYR government bonds came down on profit taking pressure, tracking weaker UST as worries over Hurricane Irma eased. Meanwhile, USD/MYR edged higher from 4.1980 to 4.2080 amid broadly firmer USD on Tuesday. In our view, MYR bonds may see further profit taking pressure in the near term, after the UN move and caution heading into FOMC meeting scheduled on 19-20 Sep.
• The central bank announced details of upcoming reopening of 5-year MGS (MGS Mar'22) at amount RM4.0 billion. Tender closes Thursday. WI was 3.51/50%. In the secondary market, the 5-year closed at 3.50%.
• Thailand: Bond curve bear steepened with yields up 2-5bps along 5-year and longer tenors amid net selling activity among local players due to global risk-on backdrop. Yet, short-end demand from offshore players remained firm with net buy position of Bt9.87 billion while long-term demand was moderate at Bt675 million.  LB22DA is weaker with yields higher at 1.78%. Our observation indicates LB226A auction would be well absorbed by local banks and funds.  
• Indonesia: IndoGBs fell on open on technical correction. Support bids were not aggressive while profit takers were heavy on the offer side. However, after Sharia bond auction, market rebounded and tone shifted as incoming bids reached record highs of IDR27.6 trillion while the government only targeted to issue IDR5 trillion, and decided to upsize by only IDR2 trillion to be IDR7 trillion issuance. At current level, bonds seem to be consolidating. Market volume decreased to IDR19.3 trillion and dominated by bonds maturing in between 1 and 5 years (42%).

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