CIMB Daily Fixed Income Commentary - 25 August 2014

Market Roundup

• US Treasury yield curve ended flatter on Friday, as the short end papers marked losses, after the market noted that the Fed chief Janet Yellen pointed that the economic growth is generally on track in the Jackson Hole summit. The 10T and 30T yields fell by 10 and 14bps during a month, due to the better buying activities along the longer end.
• MGS benchmark yields were held mostly unchanged, amid quiet trading day on Friday. While trading activities remained muted, market turned to better sellers ahead of weekend. On the other hand, MGS Jul’16 printed decent volume amounted to RM516 million throughout the day, with yield closed 1bp higher to 3.25%.
• Medium term Thai govvies traded firmer, recovered marginally from the losses suffered this week. Total transactions further shrank to Bt4.8 billion from Bt6.9 billion a day ago, amid cautious sentiment after the army general Prayuth was named as the new Prime Minister. Apart from that, we also noted that IRS rates inched up, tracking the sovereign yields movement.
• IDR denominated government bond continued its gains on Friday. The market reacted positively after constitutional court rejected the legal challenge to Joko Widodo’s victory at presidential election. However, we see that this effect will be dumping and the market will await other sentiments. Meantime, other than political issues, we view that there is no strong catalyst from domestic side particularly, but foreign funds may continue flow into the market as uncertainty on political issues declined.
• Asian credits recovered from earlier losses, as Shanghai Electric Aug’19 dealt 2bps tighter to 113bps, and Sinopec Apr’24 traded 1bp tighter to 137bps ahead of weekend.