CIMB Daily Fixed Income Commentary - 22 September 2014

Market Roundup

• US Treasury yield curve ended steeper on Friday, as the long end yields dipped by 5-7bps amid better buyers in the market. We reckon that the UST may continue to well supported in the short term.
• Malaysian government bond market was seen with active transactions, while players resumed buying activities and sending the yields a tad lower in general. MGS Mar’17 was noticeably traded 9bps lower to close at 3.48%, while MGS Sep’43 dealt 5bps higher to close at 4.72% following a weak reopening auction. The reopening of 30-year MGS ended with weak demand, indicated by a bid-to-cover ratio of 1.365 times, while average yield was generated at 4.715%.
• THB denominated government bonds strengthened marginally, supported by domestic net buying amounting Bt2.5 billion. Meanwhile trading volume increased from Bt8.6 billion to Bt13 billion ahead of weekend. LB176A, LB196A and LB21DA garnered decent buying interest and printed combined volume of Bt9 billion throughout the day.
• Bond market traded up on foreign buying, market was biddish since opening as FR70 (10yr) and FR68 (20yr) benchmark bonds were seen collected by foreign banks, sending yield lower across the curve.
• Asian credits showed weaknesses, amid thin selling pressure ahead of weekend. In primary market, Chong Hing Bank Tier-1 perp was priced at 6.5% a day before. Recent new issues were pretty well bidded, due to the stable sentiment and support from real monies. Hence, we expect the pipelines continue to be well received in the coming weeks.