FW: CIMB Fixed Income Daily - 26 Mar 2018 - IDR bonds under selling pressure, weighed by weaker sentiment

 

 

CIMB Fixed Income Daily - 26 Mar 2018 - IDR bonds under selling pressure, weighed by weaker sentiment

UST started off the day on firmer footing, guided by stock market declines. However, gains were eventually pared by positive print of durable goods orders, which expanded at 3.1% in February, above 1.6% forecasted earlier. Apart from that, Atlanta Fed president Bostic sees further rate hikes as unemployment and inflation approaching targets. As for primary supplies, we have 2T ($30b), 5T ($35b), 7T ($29b) and 2y floating rate notes ($15b) auctions this week.

MYR bonds posted gains, tracking gains in UST amid concerns over potential trade war. Upcoming primary offering will be 3y MGS reopening auction this week, where we expect an issue size of RM3b. While there is a lack of domestic economic data releases in the final week of March, we think that flows will mostly be driven by portfolio rebalancing activities by end of the first quarter this year, coupled with volatility in global financial markets.

Thai bond yield curve bull flattened marginally, as players awaited announcement of destination bonds on Monday. Foreign net purchase of Thai bond at Bt7.27b helped supporting the Baht with lower USD/THB spot since trade war concern sparked risk-off sentiment and increased demand for safer bonds. Meantime, SET index closed lower at 1,794.21pt.

Trade conflicts between US and China negatively impacted IndoGB market on Friday. Market opened weaker with 10y yields rose by 2-4bps. Elsewhere BI was heard stabilizing both FX and bond market. Activities became limited up until London opened where 10y was last given at 6.89%. Market volume increased a tad to IDR12.2t and shifted back to the end of the curve.

Asian dollar credit IG spreads widened by around 4bps on weekly basis, as risk appetite dampened after Trump announcing new tariffs on China. On the other hand, Moody's sees minor impact on the Chinese companies following the announcement of new tariffs by US, as the major revenue was domestically driven. Upcoming offerings include SK Telecom, Korea Resources and China SCE Property.

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