CIMB Daily Fixed Income Commentary - 8 August 2014

Market Roundup

• Escalated conflicts in Ukraine drove the US Treasury yields further lower by 3-6bps along the curve, as safe-haven demand continued to spur on Thursday. 10T yield fell sharply to reach the lowest level of 2.41% since July last year.
• Malaysian government bonds market was seen with heavier flows amounted to RM3.6 billion. MGS benchmark yields dipped by 1-2bps on the back of decent buying interest, while GII May’24 was actively traded and printed a sum of RM771 million on Thursday.
• THB denominated government bond yields further dropped by 1-2bps along the curve, due to the positive sentiment spurred after the central bank decided to keep the policy rate unchanged at 2.00%. Moreover, daily volume surged from Bt11.3 to Bt14.0 billion, as short dated LB196A and LB176A were heavily traded with combined volume of Bt9.6 billion.
• IDR denominated government bond market was still on negative mode on Thursday. However, transactions were seen quite active with total trading volume of IDR11.50 trillion, especially along longer dated benchmark series (10-year FR70 and 20-year FR68). Foreign players showed selling interest on the day, and pressured the market down. Players were seen favoring safe heaven assets such as US Treasury. Meantime, rupiah also weakened throughout the day. There are no fresh drivers currently and the market may still continue trending but yields may be hovering not far from previous levels.
• Credit spreads continued to trade wider on Thursday, amid weak sentiment sparked by the escalated conflict in Ukraine. New issues were also under pressured in secondary trading, as Greenland Aug’17 edged lower by 0.03pt to 99.32pts, while Jingrui Aug’19 fell from 98.23 to 97.91pts.