US Treasuries. UST gained alongside advances in European debt market (after prior day's weak performance), though was earlier pressured on higher than expected PPI data (+0.4% mom in Oct versus 0.1% consensus).
Malaysia. Secondary trading in MGS remained muted on Tuesday. Highlight was on the 10y GII reopening, which garnered 1.832x btc for the RM3.0b issuance. Average yield was higher at 4.347% (within a spread of 4.30-4.37%), from WI 4.31% quoted a day prior. Post auction we noted mild net selling activities but was well absorbed and closed at 4.35%, though trading at a wide spread of 31bps against 10y MGS, compared to median spread of 15bps since May.
Thailand. Thai bonds were traded actively but in bear-flattening mode amid net selling pressure on the front to intermediate segments. Front-end (less than 1y maturity) rose 2-5bps from constant selling flows by local players for better return on offshore investments. Therefore, we expect USD/THB FX swap will stay plummeting and THBFIX 6m would remain heavy. Moreover, foreign players maintained selling momentum on the bellies after announcement of e-switching plan strengthened selling pressure on the middle of the curve (5-9y segment rose 2-3bps from expected increase in supply of destination bonds). E-switching talk and new supply of 5y bonds lifted LB22DA 3bps to last trade 1.915% before the auction on Wednesday and we see a risk of long-tail from higher yield environment. Also, 5y THBIRS was traded higher about 2.005% interim resistance.
Indonesia. The market opened softer ahead scheduled auction. However, the market turned positive as auction demand remained solid at IDR39 trillion. The government upsized the target issue to IDR19.5t with awarded yield in line with market expectation.
Asian Dollar Credits. The market was supported on Tuesday despite sentiment remained cautious amid a lack of fresh catalysts. Also, investors appeared to be guarded in locking in profits before year-end. Chinese and Indonesian names were among sovereign papers which stood on firmer footing after being sold down late last week. Aside, China's industrial production expanded by a slower pace of 6.2% in Oct, from 6.6% a month prior.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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