CIMB Daily Fixed Income Commentary - 18 July 2014

Market Roundup

• US Treasury yields fell substantially by 4-7bps along the curve, amid knee-jerk buying activities, following the risk-off sentiment escalated after the Malaysian airplane was allegedly shot down near Russian border.
• Malaysian government bond yields dropped by 1-4bps on the back of heavy trading volume totalling RM5.9 billion. GII May’24 garnered robust interest amounted to RM1.4 billion throughout the day, while the yield was traded lower by 2bps to 4.16%. Also, GII Mar’21 and MGS Oct’19 contributed volume worth RM720 and RM699 million respectively amid robust buying activities along curve belly, while the yields were pressured lower by 1-2bps.
• Thai government bonds hovered at prior levels amid lacking of fresh market drivers. Foreign players topped net buying activities amounted to Bt9.6billion. Meanwhile, trading volume in government bond market moderated to Bt25.8 billion from Bt36.1 billion on Wednesday. Long dated LBA37DA strengthened post midweek auction, as yield fell to 4.10% from the average yield 4.14% recorded earlier.
• IDR denominated government bond market still moved in positive area on Thursday especially along longer dated papers. Recently the bond market strengthened ahead of presidential election result announcement by General Elections Commission (KPU) on 22 July, although with relatively thin volume. In total, value traded reached IDR6 trillion only from IDR6.87 trillion generated in the previous day. We found that 20-year FR68 was the most prominent paper with volume of IDR1.74 trillion, whilst other series were dealt thinly. We saw players were also seen awaiting bond auction with target size of IDR10 trillion early next week.
• Asian dollar credits posted gains following the recent rally in US Treasuries, while China credits were traded firmer as investors showed better buying interest. Wanda Jan’24 rose by 0.12pt to 106.81pts, while Agile Apr’17 climbed 0.05pt higher to 104.23pts. According to Bloomberg news, latest pipelines included IDBI, Rolta, Greenko and Power Finance.