CIMB Daily Fixed Income Commentary - 25 July 2014

Market Roundup

• US Treasuries showed weaknesses ahead of weekend, as yields rose by 2-5bps along the curve, after reaching the recent low levels.
• Malaysian government bonds moved in mixed direction, amid heavier selling pressure, attributed by profit taking activities ahead of the long weekend. However, we do not expect major selling activities at this juncture, as the sentiment held steady.
• Pretty active trading flows noted in government bond market, as players continued to take profit after seeing weaker buying interest. Daily volume rose to Bt22 billion from Bt19 billion on Wednesday. Short dated papers were generally under pressured, and traded higher by 1-4bps on Thursday. However, we noted that some longer term bonds were well supported by thin buying interest, which included ILB283A, LB296A and LB326A.
• IDR denominated government bond market was relatively unchanged on Thursday, as yields hovered at previous levels. Meantime, trading volume was thinner, about IDR15 on the day, dropped from previous last two days with daily average volume of IDR18 trillion. We saw foreign funds continued to flow into the market. Meantime, we noted that benchmark series particularly 10-year FR70 and 20-year FR68 were heavily dealt on the day.
• Asian dollar credits extended their gains on the back of higher-than-expected HSBC China Manufacturing PMI reading of 52.0, compared to 50.7 earlier. Citic Pacific perps strengthened from 115.15pts earlier the week to 115.45pts, while Country Garden Oct’23 was traded 1bp tighter to 132bps on Thursday.

We would like to wish our readers Selamat Hari Raya Idul-Fitri.
CIMB Fixed Income Research will not publish commentaries during the period 28-Jul-2014 to 1-Aug-2014. We will recommence our usual publications from 4-Aug-2014.