FW: CIMB Fixed Income Daily - 06 Feb 2018 - UST strengthened on stock market declines

 

 

UST strengthened on the back of safe haven flows. Sentiment turned guarded as stock markets extended losses, led by DJIA which declined by more than 1000pts to 24,345 on Monday. The 10T saw steep correction from around 2.85% heading towards intraday-low of 2.70%. Still, equities market losses may likely be temporary, which suggests still elevated UST yields in the short term period. We expect 10T to hover near 2.8% end 1Q2018.

Malaysian sovereign bonds posted losses on Monday, tracking UST losses late last week. Trading interest was muted, led by shorter dated papers including MGS Sep'24 and Nov'21. As for 7y GII, WI was quoted at 4.13/03 this morning. Technically, we expect to see bargain hunting interest approaching 4.10% resistance.

Thai govvies showed losses alongside weaker THB against USD. USD/THB leapt above 31.600. Overnight it was more of the same as the pair moved higher to within touching distance of 31.65 from Asian open of around 31.45. Foreign investors were net sellers of Bt1.4b of THB bonds on Monday.

IndoGB weakened on Monday on the back of rising UST yields. The probability of the Fed to hike in March had gone after the better-than-expected non-farm payrolls. Market opened 10-15bps higher but support was there as yield was too good to miss. BI showed support as well in the afternoon, bidding the 5 and 10y benchmark bonds. Overall, yield rose 8bps for the 7-20yr tenors. Market volume decreased to IDR18.9t and trade concentration shifted back to the tail end of the curve.

Asian dollar credits under pressure. Secondary market saw cautious trading following the surge in UST yields driven by robust US NFP last Friday. As for primary offerings, Bloomberg news reported that Jiangyin Chengxing will be meeting potential investors for its USD issuance this week.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
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