FW: CIMB Fixed Income Daily - 13 Feb 2018 - MY market awaits GDP data / TH bonds supported ahead of policy meeting

 

 

US Treasuries maintained weak movement (up 1-4bps) ahead of inflation data. Meanwhile, Trump's unveiling of new budget worth $4.4t – with deficit of expectation of $7.095t over next 10 years against Trump's prior target of $3.150t – didn't help UST amid expectation of ballooning debt levels. Consensus for January CPI ex-food and energy is +0.2% mom (+0.2% mom in December 2017)

Malaysian govvies tightened amid speculative net selling pressure on selected benchmarks, especially with USD/MYR hovering above 3.9400 (before falling to 3.9380 in late trading). In any case, this week we await the 4Q2017 GDP data. Consensus amongst economists is a slower 5.8% growth (3Q2017 was +6.2% yoy). Missing this consensus should provide support for the safer government bonds in the short and medium-term horizon. We also have the January 2018 CPI data due in over a week's time. The December 2017 core CPI was stable at just +2.2% yoy. The 10y MGS is likely supported below 4.00% in the short term period, and we expect the 15y MGS to move lower towards 4.35-4.40%.

Thai govvies were supported amid lower USD/THB levels (around 31.690 late Monday). Yields along the front of the curve were steady but medium tenors saw mild 1-2bps declines. Meantime, MPC is likely to keep interest rate at 1.50% this week and we expect a more exciting policy statement as global financial markets have imparted volatile swings on USD/THB and govvies yields. The MPC statement could also deliver an upbeat view on the Thai economy (as inflation moves towards BoT's 1.0% target). Thus, we see upside risk in yield movement this week, though absence of LB auctions and the CNY holidays will limit the sell effect.

IndoGB opened weaker on Monday in line with UST yield by +4bps. Average IndoGB movement was +3bps as local players were supporting the market. Today, MoF will be holding conventional bond auction targeting IDR 17 tn with series auctioned FR64, FR65, FR75, and 3 & 12 months SPN bills. Anticipating strong demand for auction in this higher yield environment especially since there are maturing bonds amounting to IDR10t this week.

Asia's USD credits were unsurprisingly steady on low volumes as we open the holiday-shortened week. The iTraxx Asia ex-Japan IG index was about half a basis point wider.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
Find us on Bloomberg at CIMR <Go>

******************************************************************************************************************************************************
Privileged/confidential information may be contained in this message. If this message is received by anyone other than the intended addressee, please return the message to the sender by replying to it and then delete the message from your computer. Unintended recipients are prohibited from taking action on the basis of information in this e-mail. No confidentiality or privilege is waived or lost by CIMB Group including its affiliates (CIMB Group) by any mistransmission of this e-mail. CIMB Group does not accept responsibility or liability for the accuracy or completeness of, or presence of any virus or disabling code in, this e-mail. CIMB Group reserves the right to monitor e-mail communications through its networks (in accordance with applicable laws). Opinions, conclusions, statements and other information in this message that do not relate to the official business of CIMB Group shall be understood as neither given nor endorsed by it.

CIMB Group Sdn Bhd (incorporated in Malaysia, (Company No: 706803-D)). Registered Office: 13th Floor, Menara CIMB, Jalan Stesen Sentral 2, Kuala Lumpur Sentral,, 50470 Kuala Lumpur, Malaysia.

Visit our website at www.cimb.com ******************************************************************************************************************************************************