CIMB Daily Fixed Income Commentary - 07 July 2014

Market Roundup

• US market closed on Friday’s Independence Day.
• MGS yield curve was held pretty much unchanged on Friday, despite heavier flows of RM2.7 billion, compared to RM1.7 billion garnered a day ago. MGS Jul’24 was seen well supported by foreign players, pressuring the yield lower by 1bp to 3.98%. Aside, we also noted that GII Sep’14 well bidded and traded lower to 2.94/95%.
• Thai government bond yields inched down along the curve belly, after the strong net buying activities done by both domestic and foreign players amounted to Bt16.1 billion on Friday. However, front end of the curve was pretty firm, as yields were held at prior levels, despite decent flows of transaction. LB176A was dealt actively and closed unchanged at 2.63% ahead of weekend.
• IDR denominated government bond market moved in narrow range on Friday. However, longer dated bonds tended to move positively. The market booked decent trading volume approximately IDR8.92 trillion, changed marginally from previous day. Meantime, rupiah strengthened due to the support by Bank Indonesia. We see that sideways movement may continue ahead of bond auction on Tuesday and especially presidential election on Wednesday.
• China papers remained upbeat on Friday, buoyed by the positive market sentiment due to the recent robust China PMI statistic. Investors showed buying interest in lower rated bonds, such as BBB/BBB- rated Cifi Jan’19 and B/B+ rated Greenland Jul’24. Cifi Jan’19 closed higher at 101.97pts, from 101.27pts a day ago, while Greenland Jul’24 was traded 6bps tighter to 331bps. Despite the positive sentiment, market showed concern ahead the upcoming financial results season, which may see some corrections in the China credit market in the next few weeks.