CIMB Daily Fixed Income Commentary - 27 May 2014

Market Roundup

• US market closed on Monday’s Memorial Day.
• Ringgit government bond market was pretty quiet on Monday, as the total trading volume declined substantially to RM1.3 billion, from RM2.4 billion on Friday. We noted that the offshore players showed better buying interest in government bills. Apart from that, the MGS benchmarks were held pretty firm, amid inactive market. We view that the players were sidelined and awaited for the 10-year MGS reopening announcement.
• Continued sell off along the Thai government bond market was witnessed on Monday, as sentiment remained pressured by politics. On Monday, coup leader Prayuth Chan-Ocha was officially endorsed as country leader by royal command. However, both YIngluck and Suthep, or leaders of political parties at odds with each other, were reportedly released from military custody the same day. Yields surged around 2-6bps on selective tenors on the day, as Thai BMA reported foreign investors were net sellers in excess of Bt4.3 billion of Thai bonds, continuing from a net sell of Bt7.0 billion last Friday. Meanwhile, the Baht reached just above the 32.62 level before hovering around 32.59 late on Monday.
• IDR denominated government bond market kept its negative movement on Monday. However, we saw local players showed buying interest, restricting deeper weakening. Overall, the market was pretty active with total volume of IDR12.65 trillion, jumped from previous day of IDR4 trillion only, while almost half of volume concentrated on 15-year FR71. We think the market may still remain its sideways movement as there is no fresh driver ahead of domestic economy data early next week.
• Muted dollar credits on Monday, as the US market was closed on Memorial Day. On the other hand, Thai credits continued to be under the limelight and traded in mixed ways amid thin transactions in the market. Ratchaburi May’19 tightened by 2bps to 166bps, while Thai Oil Jan’43 was dealt 3bps wider to 240bps.

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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