US Treasuries. UST yield curve further flattened, as long dated yields dipped following the release of weaker-than-expected economic data. ISM non-manufacturing was 57.4 in Nov, against 59.0 forecasted earlier. Chicago Fed president Evans prefers to wait and see for the inflationary pressure to pick up before rushing to raise rates in the upcoming Dec FOMC. US Nov ADP employment is expected to show 190k gain (Oct: 235k) ahead of NFP data on Friday, with Nov employment numbers expected to moderate from Oct as the impact from storm-induced rebound in hiring is expected to return to normal.
Malaysia. MYR bonds pared earlier day gains and ended flat after USD/MYR edged higher late Tuesday. WI for the 10y MGS was quoted narrower at 3.89/87%, from 3.93/85% indicated a day earlier. Technically we are expecting profit taking to emerge when 10y MGS trading below 3.85%. Looking at the median 3x10 spread of 52bps since mid-Aug, we think that the 10y MGS is likely to be priced at the range of 3.85-3.90% in the tender.
Indonesia. IndoGBs were more biddish on select series especially on 7-10y tenors, where local buying flows were seen especially near and after the lunch break. There was little profit taking activities before market closed on Tuesday, and yield curve shifted a tad lower.
Asian Dollar Credits. Focus remained on primary deals amid thinner liquidity in secondary trading heading into year end. According to Bloomberg news, after launching its $4b issuance, Indonesia sovereign is looking to issue bonds and sukuk potentially denominated in USD, EUR and JPY in 2018. IRFC's 10y green bond was guided at T+165bps, before eventually priced at T+145bps. Bloomberg news reported that Urumqi Gaoxin Investment was looking for bond issuance.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
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