CIMB Daily Fixed Income Commentary - 21 July 2014

Market Roundup

• US Treasuries weakened ahead of weekend, as players took profit on the gains posted over the week, particularly after the Thursday rally caused by knee-jerk buying activities. However, 10T stood pretty steady at 2.48%.
• Trading volume in Malaysian government bond market moderated from RM5.9 billion to RM3.7 billion on Friday. The 10-year MGS was well bidded due to short covering, while we noted some buying interest on short dated bonds namely GII Aug’17, MGS Mar’17 and Oct’19. WI for the 15-year GII benchmark was left untraded at 4.43/38%.
• THB denominated government bond yields further fell by 2-3bps, supported by buying interest from both local and foreign players. However, transaction volume declined drastically to Bt11.6 billion, from Bt25.8 billion recorded a day ago. In contrast, short dated LB176A and LB196A received better buying interest.
• IDR denominated government bond market moved in sideways on Friday. Yields still relatively hovering near previous levels. Players awaited presidential election result and bond auction on the next Tuesday. The market showed positive movement recently along with stock market and rupiah as players were showing their expectation that the result will be in line with most of quick counts.
• Asian dollar credit market was relatively quiet on Friday, as market sentiment was negatively impacted by the escalated geopolitical tension between Ukraine and Russia, alongside the Huatong’s potential bond default case. Meanwhile new issue Rolta 5-year paper was seen quoted higher around 99.60pts on Friday, compared to the reoffered price of 99.505pts.