Fw: CIMB Daily Fixed Income Commentary - 21 August 2014

Market Roundup

• US Treasuries posted gains, as market reacted on the improved labour market indicated in the latest FOMC meeting minutes.
• MGS yield curve ended flatter on midweek, as front end of the curve suffered losses led by selling pressure ahead of the announcement of July CPI, which later came at +3.2%, slightly below consensus view of +3.3%. Aside, GII Nov’16 was under heavier selling pressure, closed 16bps higher to 3.58%. WI for the 10-year SPK was last seen at 4.31/27%.
• Thai government bonds weakened, pairing with weaker Baht against dollar, while trading volumes rose to Bt12.3 billion from Bt5.4 billion a day ago. USD/THB edged higher to around 31.97, in contrast to 31.91 recorded on Tuesday. Elsewhere, LB296A was in the limelight and printed Bt6.8 billion worth of transaction throughout the day, aided by its reopening auction. In conjunction with the weakening sovereign yields, IRS rates rose by 3-4bps along the front end and belly of the curve.
• IDR denominated government bond market moved in mixed directions but showed positive tendency on Wednesday. Players are awaiting final result of presidential election from constitutional court that will be released today, and players were seen anticipating that the result will be unchanged. However, we view that players may still take cautious stance regarding what situation that will be occurred after the announcement. Moreover, on the global side, they awaited the Fed meeting minutes yesterday. Overall, the bond market still moved in narrow range.
• Asian credit spreads were mainly unchanged, as investor stayed sidelined ahead of the release of FOMC meeting minutes on Wednesday. On the other hand, recent issues were moving in mixed directions, as China Construction Aug’24 closed 3bps tighter to 255bps, while Shanghai Electric traded 2bps higher to 113bps during midweek.