CIMB Daily Fixed Income Commentary - 05 May 2014

Good Morning,

Market Roundup

• US Treasury yield curve further flattened as the long ends posted decent gains of 3-4bps amidst the release of robust NFP figure of 288k on Friday, alongside escalated political tension in Ukraine.
• The Malaysian Government Bond market saw decent flows last Friday, as we noted some interest along selected off-the-run papers. These include MGS Nov’19 which we noted bids near 3.70%, which we think offer value vis-à-vis the new 5-year MGS (MGS Oct’19) around 10bps lower. However, overall flows was still relatively muted as players awaited for further drivers, including the coming week’s Bank Negara policy meeting and the April US non-farm payrolls due after hours Friday.
• Thai bonds saw pretty weak movement while the Baht was also on weaker footing on Friday. Sentiment was guarded as we moved closer towards the possible mass rally and Constitutional Court decision on caretaker leader Yingluck’s case on her removal of Thawil Plienri as head of the National Security Council.
• IDR denominated government bond market moved flat on Friday. The Fed decided to shave its bond buying program by USD10 billion per month to USD45 billion per month and also kept interest rate low as expected. On the domestic side, inflation rata figure released on the day, which is -0.02% MoM or 7.25% YoY from 7.32% in the previous month. Moreover, trade balance recorded surplus of USD673 million, slightly higher than consensus of USD520 million. As these figures were already anticipated by players and the Fed did not say any unexpected statement, the market move in narrow range.
• Asian dollar bonds saw quiet trading ahead of the non-farm payrolls numbers especially as investors returned to their desks after the Thursday holiday. We think large focus was on newer issued papers but strong pickup was also seen along HY sovereign papers especially Indo and ROP names.

Best Regards,
CIMB Fixed Income Research
Corporate Banking, Treasury and Markets
Tel: +603 2261 8888 | Fax: +603 2261 8705
www.cimb.com

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