CIMB Daily Fixed Income Commentary - 16 July 2014

Market Roundup

• US Treasury yield curve flattened, as the front end yields rose by 2bps, post Fed chief Janet Yellen comment during congress, coupled with positive economic data releases on Tuesday.
• Muted trading activities in sovereign bond market on Monday, as players were on sidelines due to long weekend (public holiday on Tuesday). Hence, MGS yields were left almost unchanged from last Friday’s levels. Also, market is anticipating for the inflation number to be released on Wednesday, for further guidance, as the central bank showed concern on the “above than long-run inflation” in the last MPC meeting.
• Thai government bond yields fell along the curve, well supported by the foreign net buying activities. Apart from that, trading volume edged up by Bt500 million to Bt15.1 billion on Monday. While the LB196A was actively transacted, longer dated LB21DA and LB236A also attracted decent buying interest, which eventually seeing the yields fell a tad lower. In contrast, Thai IRS rates surprisingly inched up along the curve by 1-2bps.
• IDR denominated government bond market moved sidelined with mixed directions. In general, the market was muted, indicated by thin volume of around IDR5.54 trillion only, since there were lacking of drivers recently. Players still concerned on political issues especially who is the next Indonesia’s president, although some quick counts won Jokowi. We think the market may still continue its sideways movement.
• Dollar credit market was pretty quiet, as some investors were away from desks for World Cup final. According to Bloomberg, Greenko planned to run roadshows this week in Asia, Europe and US.