US Treasuries. UST continued to flatten, amid safe haven demand and CPI data largely in line with consensus. A firm fillip for UST was the Empire manufacturing index down to 19.4 reading in Nov from 30.2 in Oct. The CPI was +2.0% yoy in Oct against consensus 2.0% yoy but lower than 2.2% in Sep. CPI ex-food and energy rose 1.8% yoy or just above 1.7% consensus. Advance retail sales was rose 0.2% in Oct versus 0.0% consensus and upward revised 1.9% in Sep 1.6% prior estimate.
Malaysia. MGS were boosted by firm MYR (now below 4.1800). We suspect offshore players led interest, but due to this gains were slanted along the front of the curve whilst the bellies and far end saw mixed interest with 3Q2017 GDP still up for print this week. With the central bank sounding hawkish recently, a greater than expected quarterly GDP could lift MGS yields further. CIMB Economics Research's view of 3Q2017 GDP at +5.5% yoy whilst it recently raised its full-year 2017 GDP projection to 5.6% from 5.4% previously seeing recent upbeat industrial production numbers.
Thailand. Bonds consolidated as auction of Bt40b LB22DA received long-tail in 1.917%-1.947% range and 1.86btc. Weak auction result raised yield about 1-2bps at tenors around 5 years. Pressure on the front-end CB remained noticeable and yields rose at the same 1-2bps range. We view the auction result showed sign of yields bottoming out as we are close to year-end 2017 and the market awaits US tax cut plan and Fed rate decision in December.
Indonesia. Market opened stronger amid strong auction but followed by some profit taking action by local names. Meanwhile, the government released trade data which remained positive even though lower than consensus. We think market remains resilient with talk the government may cancel the next conventional bond auction. BI meeting is today and we expect no change to rates.
Asian Dollar Credits. Asian dollar credits continued to see weakness, ahead of congested primary pipelines and with fears of downturn in high yield bond prices in both emerging and developed markets when Fed hikes next month. Pipeline deals include likes of Hong Yang group and Bank of China which gave final guidance 3ml+90 for its proposed 5y notes.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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