FW: CIMB Fixed Income Daily - 13 Mar 2018 - ID, TH & MY bonds steady despite stronger-than-expected NFP

 

 

CIMB Fixed Income Daily - 13 Mar 2018 - ID, TH & MY bonds steady despite stronger-than-expected NFP

UST were dealt firmer particularly at the far end of the curve, amid decent demand at primary auctions. The $21b 10T auction saw decent demand reflected by 2.5x btc, slightly higher than average 2.45x btc seen in the past 12 similar auctions. High yield was 2.889%, in line with WI, while indirect bidders accounted for 66.2% of the sale. Aside, the $28b 3T auction was also well-received with 2.94x btc and high yield generated at 2.436%. Upcoming highlight will be $13b 30T offering and CPI data scheduled Tuesday. Boston Fed president Rosengren thinks the steel and aluminum tariffs will not have big impact on the economy or ignite a trade war.

Trading activities were muted in the MYR bond market, as sentiment turned cautious following the bear-steepened UST curve. On the front end of the curve, we reckon that select GIIs 21-22s are attractive including GII Mar'21 at 3.79% or 40bps spread against the 3y MGS (compared to tighter spread of <30bps before mid-Nov last year). As for the 7y MGS auction, WI was heard at 3.93/86. We reckon the new 7y benchmark is likely to be priced within range of 3.87-3.91%, which is around 7-11bps spread against the 10y MGS, above the median spread of 6bps since early 2017.

Thai government bonds were little changed after release of NFP report last Friday. Outright trading activities declined to Bt82.32b as the market lacked new trading cues amid thin macro and events week. Foreign investor sold short-ends at Bt1.58b as USD/THB failed to break below 31.30 while purchasing long ends at Bt1.50b. Foreign investors turned to buy Thai stocks at Bt632m as equity sentiment was bolstered by the US jobs report. US NFP print was robust at +313k in Feb, way above 200k consensus.

After five days of persistent net selling pressure, IndoGBs took a breather in line with regional risk-on mode. Market turned biddish and activities increased towards closing. Today, MoF will be holding a conventional auction with IDR17t target. Series offered would be 3 and 12m SPN bills, along with 5y, 10y, 20y and 30y tenures. Expect demand to be lower than the week before.

Asian dollar credits were traded mixed, with sentiment pressured by weakened UST post NFP release. Primary market saw active flows as sentiment improved. Standard Chartered 15NC10 and 6NC5 were guided at 200 and 140bps above UST.


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