CIMB Daily Fixed Income Commentary - 26 June 2014

Market Roundup

• US Treasury yield curve flattened, with the short dated 2T yield rose 2bps higher to 0.48%, while longer end yield dipped by 2bps following the release of revised 1Q14 GDP data, which contracted by 2.9% instead of 1.0% reported earlier.
• Malaysian government bonds yields hovered at prior levels, amid thin transactions during midweek. We noted some buying interest on GII Sep’15 and Mar’21, which pressured the yields marginally lower to 3.37% and 4.11%. IRS rates were pretty unchanged throughout the day. We expect MGS yields continued to be traded sideways at this juncture, due to the cautious sentiment.
• Thai sovereign yields edged up by 1-2bps along the curve belly, led by local players’ net selling activities, totalling Bt1.2 billion on Wednesday. Meanwhile, daily trading volume declined by Bt200 million to Bt18.2 billion. LB196A was actively traded, with yield inched up by 1bp to 3.16%.
• IDR denominated government bond market still recorded losses on Wednesday especially along longer dated bonds. Although bond yields continued to increase, we saw that some players showed buying interest after yields increased recently, restricting deeper weakening. In addition, albeit there were no fresh drivers to guide the market, trading volume was still significant totaling IDR11.92 trillion, decreasing compared with previous day of IDR16.40 trillion. As usual, the most traded papers were 10-year FR70, 15-year FR71, and 20-year FR68 which garnered a sum of volume of IDR7.57 trillion, equivalent to the two third of total daily volume.
• Asian dollar credit spreads were a tad wider, as investors were seen realizing profits garnered earlier. Regional markets were under pressure particularly Chinese names, as CLP Power perps declined by 0.10pt to 100.97pts, while China Overseas May’24 widened by 5bps to 326bps. In primary market, B+ rated Pakuwon Prima was allegedly issuing a 5NC3 paper, with a guidance price of 7.625% on midweek.

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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