Friday, October 27, 2017

FW: CIMB Fixed Income Daily - 27 Oct 2017 - ECB set to taper



US Treasuries. UST further weakened, reacting to ECB tapering news, as the central bank plans to scale back its monthly asset purchases from EUR60 billion to EUR30 billion beginning next January, while the stimulus will be extended until Sep 2018 or beyond if necessary. Meanwhile, the $28 billion 7T garnered a low 2.39x btc, compared to average 2.55x for the past twelve similar auctions. High yield was generated at 2.28%.

Malaysia. MGS yield curve ended steeper, as bonds weakened amid muted flows. Highlight was on the 30yr MGS reopening auction, which ended with a disappointing result. Post auction, we noted some buying-on-dips interest pushing the yield lower to 4.85%, before eventually closed flat at average yield of 4.96%. On the flipside, IRS curve shifted lower by 1-3bps on front end to bellies, as UST yields retreated from recent highs. Pending tabling of Budget 2018 on Friday, Prime Minister reportedly saying that the fiscal deficit target for 2018 will be lower than 3%, and economic growth rate will be in 5% range, while the government forecasts crude oil price to be trading at $52/bbl for next year.

Thailand. Bond market closed on special holiday (royal cremation of King Bhumibol).

Indonesia. Bond market was volatile on Thursday, where it opened in offerish tone, and bonds weakened quite face after USD/IDR broke 13600 level, as yields went up by 3-5bps. However, bond market saw better support along with BI showing bids for 10 and 15yr benchmarks, which eventually see market rebound.

Asian USD credits. Primary market continued to see active flows while secondary trading took a breather amid slight pull back in UST yields after spiking up during mid-week. Despite that, the recent priced issuances were seen holding up well. In primary space, China's 5 and 10yr tranches were priced at T+15bps and T+25bps. Aside, Hainan Airlines 2018 bond was guided at 6.35%, while Mongolia sovereign 5-year paper was priced at 5.625%.

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