Tuesday, October 24, 2017

FW: CIMB Fixed Income Daily - 24 Oct 2017 - Fed chair nomination pretty soon



US Treasuries. UST yields edged lower after spikes in late last week. We think risk of UST further weakening remains intact this week, with potential more progress in the tax proposal (expected to go to the House). Trump said that he is very close in deciding on the Fed chief nomination, while news reported that he favors John Taylor and Jerome Powell as the new Fed chief, while Yellen remains under consideration at this juncture.

Malaysia. Malaysian sovereign yield curve bear flattened, taking cue from weakened UST amid optimism over the progress of tax reforms. Selling pressure was seen mostly on front to medium dated papers, including 3 and 7yr MGS benchmarks. With external risk remains intact (as UST yields may trend higher in the short term), we reckon that players should keep duration short in the near term, particularly buying on dips after recent weakness.

Thailand. Bond market closed on Chulalongkorn Day.

Indonesia. IndoGB market traded lower in price on the back of USD strengthening. Despite no huge flows, market was soft and bids were defensive for the entire day, while activities centered on 5 and 20yr buckets. Expect IndoGB movements to be influenced by global news this week as there's no local catalyst at the moment. Market volume was steady amounting IDR8.7 trillion.

Asian USD credits. Secondary trading in USD credit market closed mixed with little changes yesterday. Sentiment was slightly weighed by anticipation of primary offerings and weakened UST on the back of optimism over the progress of Trump's tax reforms. Bloomberg news reported that upcoming potential issuers include China sovereign, Korea Electric Power, Chandra Asri and Avation Plc.

Best Regards,

CIMB Treasury & Markets Research-Fixed Income
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