CIMB Daily Fixed Income Commentary - 6 August 2014

Market Roundup

• Mixed trading seen in US Treasury market, as the positive economic data releases made little impact to the market. 10T yield inched up by 1bp to 2.49%.
• Malaysian government bond market activities remained subdued, as players were sidelined ahead of the announcement of June trade balance number on Wednesday. On the other hand, we noted some constant buying interest on the short and medium term papers.
• THB denominated government bonds posted gains, amid thinner trading volume amounted to Bt7.2 billion. Despite the improved buying interest, players remained cautious ahead of MPC meeting which is scheduled on Wednesday. Meanwhile Thai IRS curve shifted lower by 2-3bps, causing the bond-swap spread widened on the both ends of the curve.
• IDR denominated government bond yields moved up on Tuesday. GDP data showed a growth rate of 5.12% YoY or 2.47% QoQ, below economists median estimate figure of 2.65% QoQ. Although players focused on auction held by government, transactions in the secondary market were relatively active with volume of IDR11.88 trillion compared to IDR8.20 trillion in the prior day. A lot of transactions were dealt along of the benchmark series particularly 20-year FR68 about IDR4.80 trillion. We see that recent economic data is not strong enough to support the market.
• Asian credit market was traded in softer tone amid lacking of fresh market guidance at this juncture. In primary market, Aa3 rated EXIM Bank of Korea was looking to offer 5- and 12-year papers, with initial price guidance at 90 and 100bps.