FW: CIMB Fixed Income Daily - 08 Jan 2018 - Positive risk sentiment lifted UST yields

 

 

US Treasuries. UST posted gains following the release of weaker-than-expected non-farm payrolls, which registered 148k job added for the month of Dec, below consensus 190k. Apart from that, unemployment rate stood unchanged at 4.1% during the same period. However, UST yields eventually shifted higher in conjunction with rise in equity market on Fri. Aside, San Francisco Fed president John Williams sees three rate hikes in 2018, as the economy is doing well while markets expect on-going gradual tightening.

Malaysia. Highlight was on the currency pair where USD/MYR dipped below 4.00 for the first time since Aug 2016. Secondary trading was seen with net buying interest, driven by the positive of MYR. Elsewhere, trade activities remained robust but expanded by a slower pace. The exports and imports climbed by 14.4% and 15.2% yoy respectively in Nov, lower than 18.9% and 20.9% yoy registered a month prior. Elsewhere, foreign reserves continued to climb and recorded at $102.4b for the period ended 29 Dec, from $102.2b two weeks earlier.

Thailand. Bond yield curve shifted lower about 2-4bps across the curve due to foreign purchase. The was mild selling action by local funds in the morning especially for LB26DA but foreign demand eventually emerged and trades were dominated by the bond in later session and pushed the curve lower on Fri. At the same time, non-domestic players looked to receive fixed rate, pushing IRS curve flattened by 4-5bps and 5-year THBIRS rate was traded under key level of 1.90% and last done about 1.865%.

Indonesia. IndoGB traded slightly firmer in the morning session following Thursday's rally. Though at noon, we saw some profit taking actions in the market but market appeared to be well supported by local banks. IndoGB recovered to Thursday's level with 5y and 20y strengthened further. Market volume fell to IDR25.1t and was dominated by bonds maturing in over 10 years (48%).

Asian Dollar Credits. USD credits were seen traded on firmer footing amid positive risk sentiment along with regional stock market gains ahead of weekend. Notably, CDS spreads were seen at their tightest levels since Sep last year. As for primary pipelines, Country Garden and Zhongyuan Yuzi were reportedly arranging roadshow beginning 8 Jan. Longfor's 5 and 10y bonds were guided at T+200bps and T+235bps each.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
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