CIMB Daily Fixed Income Commentary - 30 September 2014

Market Roundup

• Safe haven flows resulted in gains along the US Treasuries market on Monday with yields down 4-5bps along the bellies and far end of the curve. Some fears after political protests in Hong Kong boosted Treasuries as well as comments from Chicago Fed President Charles Evans who said inflation may not be as strong as many economists may be expecting.
• The dollar strength remained but its gains was slowed amid political protests in Hong Kong whilst there was some reversal on the dollar as well as traders reined in expectations that the Fed will tighten monetary policy. The USD was spotted around 109.45 against the JPY on Monday after closing last week at 109.42.
• Malaysian government bond market recorded heavier flows amounting RM4.3 billion, thanks to the 5-year GII reopening auction. The 5-year GII reopening was well received, as bid-to-cover ratio reached 2.359 times, while average yield settled at 3.793%. Meantime, both 10-year MGS and GII attracted decent interest, transacted at 3.91% (-1bp) and 3.37% (unchanged) respectively on Monday.
• THB denominated government bonds posted gains on the back of weaker-than-expected customs exports for the month of August. Despite customs trade balance recorded a surplus of $1146 million during the same period, it was due to the sharper decline in customs imports (-14.17% vs -3.60% consensus), which questioned the domestic economic recovery path.
• IDR bond market continued its downtrend movement since Friday, coupled with sell-off activities on weaker Rupiah, sending yield curve up. Foreign banks were seen on selling side, while BI was seen supporting the market especially on 10yr benchmark. Adding fuel to the fire is tomorrow's bond auction, which will add more bond supply, although market players might see the opportunity to do bottom fishing in the auction.
• In Asian credit market, China and HK names slightly weakened, amid market concerns following the rally in Hong Kong over the weekend. Sun Hung Kai Feb’24 widened by 1bp to 173bps, while China Overseas May’24 quoted 3bps wider to 274bps on Monday.