CIMB Daily Fixed Income Commentary - 01 October 2014

Market Roundup

• US Treasuries retreated and closed weaker on Tuesday, while fresh economic data releases made little impact to drive the market, as players awaited for guidance from Friday’s nonfarm payroll number. Hence, market volatility may stay low ahead of Friday.
• Ringgit government bond yields dipped marginally, amid improved buying interest boosted by portfolio rebalancing activities. Daily volume remained heavy at RM4.6 billion, increased from RM4.3 billion recorded in previous day, supported by the huge chunk of RM2.5 billion contributed by MGS Feb’15, which closed 9bps higher at 3.34%.
• Investors were seen actively picking up Thai government bonds, following the weaker economic indicators released. Meantime, daily volume surged drastically from Bt15.2 billion to Bt28.6 billion on the back of month end consolidation. On the other hand, Commerce Ministry blamed that the domestic exports prospect appeared to be subdued in this year, due to slow recovery in global economies.
• Yield curve went higher on auction day with Rupiah traded above 12,200 (before went to 12,150 after lunch hours). Government received 19.8T of incoming bids, however only issued 7.75T of bonds, below MoF's 10T target. 5yr (FR69) auction was cancelled. Locals were not eager yet to buy, however bidding interest starts to appear post-auction result.
• Market was noted with relatively thinner flows heading towards the holiday in China. Aside, risk-off sentiment also persisted on HK demonstration, along with weaker economic release, as China Manufacturing PMI for September revised lower to 50.2, from preliminary reading of 50.5. In secondary market, Citic Pacific perp closed lower by 0.18pt at 115.10pts, and Agile perp also headed lower from 84.88pts to 84.59pts.