CIMB Daily Fixed Income Commentary - 5 August 2014

Market Roundup

• US Treasuries were traded slightly firmer as the players continued to show buying interest along the curve bellies, driven by the spillover positive sentiment last week. 5T and 10T each fell by 1bp to close at 1.65% and 2.48%.
• MGS yields hovered at prior levels amid lacking of fresh market guidance. Players were seen preparing to rollover the maturing MGS Aug’14 by buying into short dated papers and bills. Overall market was noted with decent buying interest after the Raya week.
• Muted Thai government bond market, due to the cautious sentiment ahead of MPC meeting on August 6. Medium term bonds such as LB196A and LB21DA were well bidded, thanks to the moderated inflation in July, which eased the concerns of potential rate hike. Apart from that, IRS rates dropped by 1-5bps along the curve, led by the strengthening in US Treasuries on Friday.
• IDR denominated government bond yields rose a tad higher on Monday, while Central Bureau of Statistics (BPS) announced inflation rate in July reached 4.53% YoY from 6.67% YoY in the previous month. Meantime, trade balance figure was also released on the day, which booked a deficit of USD305 million, not far from the market anticipated USD387 million, thus the announcement gave little impact to the market. Although the market was opened just after long holiday, transactions were quite active with volume of IDR8.20 trillion approximately.
• Asian dollar credits were seen moving in mixed directions, while Chinese names were under pressured, particularly the lower rated bonds. BB rated Longfor Jan’23 dipped from 96.92pts to 96.63pts, while B rated Cifi Jan’19 fell from 101.05pts to 100.61pts. However, higher rated papers held pretty firm, as A2 rated China Merchant Land stood unchanged at 156bps, while Aa3 rated Sinopec Apr’24 widened by 1bp to 143bps.