CIMB Daily Fixed Income Commentary - 23 July 2014

Market Roundup

• Short dated US Treasuries posted gains as market was noted with some buying-on-dips activities, while long end yields remained firm on Tuesday.
• Malaysian government bond market weakened on the back of profit taking activities, after the strong rally post MPC meeting. While the MGS papers posted losses, GII papers such as GII Mar’21, May’24 and Dec’28 were traded marginally weaker in contrast.
• Thai government bond yields dipped further at the long end on Tuesday. We suspect that investors extended portfolio duration, shown by better bidding interest on the longer end of the curve. LB196A was actively traded by Bt6.3 billion, despite posted less gain compared to the longer dated papers. Aside, Thai IRS rates inched down at longer end, mainly tracking the overnight UST movement.
• IDR denominated government bond market ended with higher yields on Tuesday. The weakening occurred especially after the president candidate Prabowo stated that their coalition rejected the result that announced by KPU due to massive, structural, and systematic cheating on the election according to them. Immediate after the statement capital market (both stock and bond) booked losses significantly and rupiah also moved negatively. Meantime, volume jumped drastically to IDR19.13 trillion against IDR5.93 trillion generated in the previous day.
• Asian dollar credits posted gains, despite lacking of fresh market movers on Tuesday. Bangkok bank tranches maturing 2018 and 2023 widened by 5bps to 108 and 148bps respectively. Aside, Agile Feb’19 was traded higher by 0.15pt to 103.21pts as market sentiment recovered from last week.