CIMB Daily Fixed Income Commentary - 17 July 2014

Market Roundup

• Long dated US Treasuries posted gains, despite the positive economic data releases on Wednesday.
• MGS yields dipped by 1-3bps along the curve on thin buying activities well ahead of the release of inflation data on Wednesday. Trading interest was on the short dated paper namely MGS Sep’16 and Oct’19, while we also noted decent flows on the medium term papers such as MGS Mar’23 and Jul’24. Meanwhile, long dated IRS rates edged down by 1-2bps amid thin flows.
• THB denominated government bonds posted gains on the back of strong net buy interest shown by the foreign players on Wednesday. Aside, market sentiment improved, as Bank of Thailand governor Prasarn stated that the central bankers will stabilize the local currency at a neutral level to maintain stability in the financial market as well as economic growth. Trading volume further advanced to Bt36.1 billion, from the high of Bt27.7 billion achieved a day ago, while players were seen better bidding on the curve belly papers – LB196A and LB236A.
• IDR denominated government bond market moved slightly positive on Wednesday, as foreign players showed their net buying interest. Overall, the market moderated but booked relatively heavier volume of IDR6.87 trillion compared with previous day of IDR5.54 trillion only. There was no strong support to the market recently. The market took significant reaction just a day after the election, but after that the market was relatively quiet. Yields may still change insignificantly currently.
• While the China second quarter GDP rebounded to 7.5% from 7.4% a quarter ago, news of China’s trust companies’ lending reduction in the first half of the year exerted pressure onto Chinese names, particularly on the lower rated property papers such as KWG Jan’19 (traded lower by 0.56pt to 102.25pts) and newly issued Future Land Jul’19 (closed lower by 0.11pt to 99.16pts).