CIMB Daily Fixed Income Commentary - 13 August 2014

Market Roundup

• US Treasury yield curve steepened, led by selling activities along the long end, well ahead of the 10T and 30T auctions, in the absence of major economic indicators.
• MGS yield curve marginally flattened as the shorter end MGS yields rose by 1-3bps on Tuesday, while longer end yields were left unchanged at prior levels. Trading activities were driven by the short dated MGS Aug’14, which garnered RM892 million worth of volume throughout the day. Aside, we also noted players taking profit on the MGS Jul’16, which closed 3bps higher to 3.21%. Apart from that, Ringgit IRS rates inched up by 1-2bps along the curve, tracking the arising sovereign yields.
• Thai bond market closed on the Queen’s birthday.
• IDR denominated government bond market relatively unchanged as there was no fresh driver on Tuesday. Moreover, trading volume dropped to IDR4 trillion only from IDR5.54 trillion in the previous day. We think that the market may still continue its insignificant movement as players are awaiting BI rate announcement tomorrow that probably still maintain at current level of 7.50%.
• Asian credits were traded firmer, buoyed by the stronger buying interest after the Ukraine’s conflict eased. In secondary trading, Indian financial papers benefited from the positive buying activities, as IDBI Sep’19 traded 0.09pt higher to 103.45pts, while EXIM Bank of India Oct’19 edged higher to 101.77pts from 101.56pts. Meanwhile, newly issued Shanghai Electric Aug’19 rebounded and traded 14bps tighter from the issue spread of 140bps.