Bearishness in UST persisted, as yields were sustained at higher ranges, although inching marginally lower on Thursday. Notably, the 2T upward momentum eased, with spread between 2T and Fed funds upper bound hovering around 61bps, after peaking at 66bps earlier this month. Elsewhere, BoE kept its policy rate unchanged at 0.50%, meeting consensus expectation, but signaled for potential earlier hike and greater extent of tightening.
MYR bonds consolidated within narrow ranges. Flows were heavier and led by short dated MGS namely MGS Nov'19, Jul'21 and Feb'21 on Thursday. On the other hand, foreign players continued to buy MYR govvies for the month of Jan, as foreigners share in MGS+GII rose to 29.3% from 28.9% registered in Dec (up RM4.62b in MGS+GII holdings). With MYR easing and UST weaker, MYR bonds may continue to see range trading ahead of the long Chinese New Year break.
Thai government bonds came under foreign net selling pressure (foreign investors were net sellers of Bt7.3b of Thai bonds on the day). The Baht was caught up with the Yuan selling and pushed it up to break above 31.80 from a morning low of 31.62 at the move. It then traded largely between 31.80 and 31.90 finishing at the upper end of the range.
IndoGBs were quoted relatively higher as local players actively bid benchmark series. Bids were seen along 5y and 15yr tenors at current levels. We also saw offshore banks unloading short-dated bills due to higher NDF.
Asian Dollar credit market saw muted trading on Thursday. Sentiment improved marginally but remained cautious, after the global stock market rout took a breather. As for primary deals, Golden Energy and Resources was heard pricing its 5NC bond around 9.5%. Aside, Fantasia Holdings paper maturing 2019 was guided at 7.25%. Expect flows to be thinner approaching CNY holidays.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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