CIMB Daily Fixed Income Commentary - 22 August 2014

Market Roundup

• US Treasuries recovered losses as players were seen buying on dips along the longer end of the curve, after seeing the yields rose higher by 2-4bps on week-on-week basis. Also, the gains were capped by the cautious trading activities well ahead of guidance from the annual Jackson Hole summit.
• Ringgit denominated government bond market was seen with moderated trading flows, amounted to RM1.9 billion, aided by the 10-year SPK reopening auction which printed RM900 million throughout the day. Aside, short dated MGS Mar’17 and Jul’16 ended firmer, supported by decent buying interest.
• Thai government bond yields edged higher on the back of cautious sentiment in the market, following the news of naming the army general Prayuth as the new Prime Minister on Thursday. On the other hand, market was pretty quiet, as daily volume fell drastically from Bt12.3 billion to Bt6.9 billion. Elsewhere, IRS curve steepened, as the long end rate surged substantially higher by 6bps.
• IDR denominated government bond yields hovered around previous level on Thursday. However, the market showed positive tendency on the day, yields declining by approximately 1-3bps. Constitutional Court read verdict on presidential election result dispute on the day. Players had anticipated that the verdict did not change the real count result. We think that the market may still move insignificantly, players may take wait-and-see, watching what the next step that will be taken by Prabowo-Hatta. Meanwhile, there are no other fresh drivers to drag the market significantly.
• Asian dollar credits moved in tight range, amid steady sentiment, despite the August preliminary HSBC China Manufacturing PMI fell unexpectedly to 50.3. A+ rated Sinopec Apr’24 and A2 rated China Merchant Land traded 1bp wider to 138bps and 159bps respectively. On the other hand, lower rated names such Country Garden May’19 dipped by 0.07pt to 104.59pts, while Cifi Jan’19 inched up by 0.01pt to 103.03pts. Meanwhile, PTTEP perp edged 0.03pt lower to 101.50pts.