US Treasuries. UST weakened further with sentiment still bothered by Yellen's latest speech for a Dec hike. Sentiment was also perturbed by GOP's tax reform plans which include reduced corporate tax to 20% from 35% but still had worries that benefits are slanted towards the rich and has plan to eliminate most all of itemized deductions. Treasury sold $34 billion of 5T at firm 2.52x BTC and high yield 1.911%.
Malaysia. MYR sovereign bonds mildly weakened, tracking UST post Yellen's comment on Fed's tightening. As for 15-year GII reopening, WI was offered at 4.48%, or 20bps against 15-year MGS. In our opinion, demand may be relatively soft amid recent climb in UST yields. Hence, we are seeing it to be priced at the slightly higher range against WI.
Thailand. The MPC held interest rates unchanged in unanimous decision at 1.50%. The committee views current benchmark interest rate as accommodative enough and they would not afford risk financial instability. Bond curve steepened especially in 5-10y tenures which rose 4-6bps.
Indonesia. IndoGBs continued previous day's movement on the back of USD strengthening. Sellers were seen across the curve mostly on benchmark series, while bids still appeared but defensive, driving curve up by 12-15bps. In other news, MoF is going to have a scheduled debt-switch today - buy back 05/37 FR45 from market and swap with benchmarks 08/32 FR74 and 05/38 FR75.
Asian USD credits. USD credit market remained firm despite the earlier geopolitical tensions from North Korea. iTraxx Asia ex-Japan IG index continued to climb, edging 1bp higher during mid-week. Elsewhere, S&P warned of potential significant correction as the Asian IG USD bonds were traded near the tightest spread against UST since late 2007. Among the primary pipelines, OCBC was heard looking to issue EUR denominated 5-year covered bond.
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