CIMB Daily Fixed Income Commentary - 22 July 2014

Market Roundup

• US Treasury yields hovered at Friday levels, amid lacking of major market movers on Monday. However, long dated 30T was traded firmer and closed at 3.26%.
• Malaysian bond market remained upbeat as players continued to show buying interest, especially in GII papers, as the conventional MGS looked less attractive post recent rally. GII May’24 and Dec’28 were well bidded, pressuring the yield lower by 1-2bps to close at 4.13% and 4.40% on Monday. Moreover, short dated GII Jul’14 also received good buying interest and traded lower by 2bps to 3.13%.
• Thai sovereign yield curve flattened, as players were seen tapping on the medium and long term bonds, pressuring the yields lower by 2-6bps. Foreign investors were net buying of Bt10 billion worth of bonds on Monday. However, front end of the curve were held steadily at Friday’s levels. LB196A printed decent volume of Bt4.9 billion throughout the day. Meanwhile, Thai IRS rates edged higher by 1-3bps, following the weakened UST on Friday.
• IDR denominated government bond market still moved in narrow range on Monday. Players awaited official presidential election result by KPU and bond auction, which both of events will be held on Tuesday. However, the market moved in positive territory as players are confident as the final result will be in line with most of quick counts that stated Jokowi’s victory. Overall, the market was still thinly traded, with about IDR5.93 trillion changing hands. The heaviest transacted was 20-year FR68 about IDR1.13 trillion, whilst other series were dealt with relatively insignificant volume.
• Muted dollar credit market on Monday, as credit spreads were noted largely unchanged due to the public holiday (Marine Day) in Japan. Meanwhile, the Markit iTraxx Asia ex-Japan IG Index stood pretty firm at 105bps, close to 106bps recorded on Friday.