CIMB Daily Fixed Income Commentary - 4 August 2014

Market Roundup

• US Treasuries recovered losses posted earlier, thanks to the robust buying interest led by weaker-than-expected Nonfarm Payroll number on Friday, which eased the market worries following the strong second quarter GDP report during midweek.
• Malaysian sovereign yields stood pretty firm at prior levels on the back of quiet market. MGS Mar’17 printed decent volume of RM403 million, while yield ended marginally higher at 3.48%. We expect heavier trading flows after the short week due to Raya festive.
• Thai government bond yields rose 1-2bps higher ahead of weekend, despite local players showed strong net buying interest, totalling Bt8.7 billion. Daily trading volume inched up from Bt14.0 billion to Bt14.2 billion on Friday. While market was generally weaker, LB175A was traded notably 9bps higher to 2.59%. Aside, front end of the IRS curve edged down by 2bps, despite both sovereign bonds and overnight UST showed weakness.
• Indonesian bond market closed on Idul Fitri public holiday.
• Asian credits showed weakness ahead of the release of US NFP figure on Friday, amid risk aversion sentiment at this juncture. Credit spreads widened despite China manufacturing PMI rose to 51.7 in the month of July, as investors were seen offloading positions particularly the lower rated bonds. Agile perps inched down by 0.19pt to 88.22pts, while B rated Cifi Jan’19 edged lower from 101.40 to 100.94pts.