FW: CIMB Fixed Income Daily - 05 Jun 2018 - Regional Govvies Little Changed

 

 

US Treasuries weakened on Monday as markets started

the week on improved risk appetite. Last Friday’s print of

greater than expected non-farm payrolls contributed to

the sentiment as well as dissipating concerns over in Italy.

On the other hand, macro data on Monday were weaker

than expected with factory orders down by 0.8% in April

against -0.5% consensus. Also, trade war concerns loom

on the horizon. EU and Canada have yet to respond to US’

tariffs on their steel and aluminum exports, while

investors are awaiting for the outcome from Commerce

Secretary Ross’ trade negotiations with China.

 

Thai bond yields were little changed (yields traded up at

less than 1bp) on Monday as foreign investors maintained

buying interest though amid mild profit talking pressure

from local funds. Total additional supply of Bt115b for

3m, 6m, and 1y BoT bonds on Tuesday may require higher

yields to digest the sell smoothly.

It was relatively quiet day for IndoGBs on Monday.

Trading was in a tight range before some weakness was

noted ahead of the bond auction. Flows were

concentrated on 10y and 15y benchmarks bonds.

Inflation was lower-than-expected at 3.23% yoy in May

versus +3.30% consensus and +3.41% prior but did not

support the market by much.

 

Malaysian government bonds moved sideways in a

limited range Monday. The 10y MGS remained

unchanged at 4.20%. To recap, the market has remained

cagey as players are still debating policy direction of the

new government, and especially how this could affect the

sovereign credit. Main concern was fiscal impact from the

implementation of the new government’s key election

proposals such as the abolishment of GST and reintroduction

of fuel subsidies. However, on the last day of

May, the new government via MOF Lim Guan Eng came

out to share its target numbers. We are positive on the

details coming out of the MOF and which should aid

sentiment in the Malaysian bond market in the short term

horizon. The MOF said the country is on pace to meet the

prior targeted 2.8% of GDP fiscal deficit this year.

 

CIMB Treasury & Markets Research-Fixed Income

Tel: +603 2261 8557 | Fax: +603 2261 8705 

www.cimb.com

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