CIMB Daily Fixed Income Commentary - 20 August 2014

Market Roundup

• US Treasury yields inched up by 1bp while players were on cautious tone ahead of the FOMC minutes release on Wednesday, alongside with annual Jackson Hole summit this week.
• Muted government bond market on Tuesday, as players remained sidelined ahead of the release of July inflation number, which consensus forecasted that it will remain at the pace of +3.3%. On the other hand, MGS benchmark yields edged up amid thin selling pressure.
• THB denominated government bond yields hovered at Monday’s levels, while trading activities remained subdued despite daily volume surged a tad higher to Bt5.4 billion. While the government bond market remained inactive, short dated papers (less than 5-year) were seen with better trading interest, while yields rose by 0.5-1.0bp in general. Similarly, Thai IRS rates stood unchanged at prior levels, amid absence of market movers.
• IDR denominated government bond market showed active transactions on Tuesday. Total trading volume reached IDR11.21 trillion on the day, jumping significantly from several previous days with volume around IDR4-5 trillion only. Most of transactions came from benchmark series, particularly 20-year FR68 (IDR4.57 trillion) and 10-year FR70 (IDR3.31 trillion). However, the market ended with higher yields of around 3-7bps on the day. The market may still move tightly as no fresh drivers from domestic especially. Meantime, currently players are waiting for the Fed meeting minutes that will release today.
• Asian dollar credits were held slightly firmer, amid lacking of major market guidance on Tuesday. China Construction Aug’24 was traded further tighter to 258bps, from the issue spread of 275bps last week. Aside, latest pipelines included Adani Abbot, Korea Western Power and Oceanwide.