CIMB Daily Fixed Income Commentary - 17 June 2014

Market Roundup

• US Treasury yield curve flattened marginally, led by some positive economic releases on Monday. Front end yields edged up by 1-2bps, while long dated 30T stood pretty firm at 3.40%.
• Malaysian government bond yields fell marginally along the curve belly, amid quiet market due to no fresh market mover at this juncture. We expect the central bank to announce the reopening of 3-year MGS this week, with a target issuance size of RM3-3.5 billion.
• Thai sovereign yield curve flattened on Monday, led by buying-on-dips activities, which pressure the yields a tad lower along the curve, despite the 2-year bond yield stood firm at 2.35%. Front end of the curve remained steep, as the 3- and 5-year spread further widened to 69bps. On the other side, total trading volume moderated to Bt18 billion from Bt20 billion last Friday, while we saw active trading on LB196A.
• IDR denominated government bond remained sidelined on Monday. Trading volume moderated to IDR8.16 trillion, thinner compared with IDR9.54 trillion of last Friday. We noted that 15-year FR71 was the most actively transacted about IDR1.82 trillion. Another two benchmark series namely 5-year FR69 and 10-year FR70 also recorded hefty volume of IDR1.67 trillion and IDR1.24 trillion respectively. The bond market may still move insignificantly as players await the Fed meeting that start today which may cut its stimulus by another USD10 billion per month.
• Market focus was on the new issues, as the OCBC subdebt maturing 2024 tightened by 7bps to 168bps on the retail buying interest. Aside, PTTEP perps weakened from 100.66pts to 100.39pts on further profit taking activities, partially due to the anticipation of new issues flowing into the market. Pipeline on the primary market included Noble Group and China Hongqiao, while Far East Horizon was reported that potentially issuing perps due to the lower yields in long end.

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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