CIMB Daily Fixed Income Commentary - 18 December 2014

Market Roundup

• US Treasury yields rose by 4-9bps along the curve in a volatile trading day, after the FOMC minutes appeared to be more dovish than market expected, by mentioning that the policy makers would be “patient in the process of normalization”.
• We saw improved buying interest in Ringgit govvies, amid realignment along the benchmark yields. The 7-year MGS still appeared to be attractive at 4.24%, in contrast to the 10-year MGS which closed at 4.25%. Aside, total transaction was active, totalling about RM3 billion on Wednesday.
• Thai government bonds extended losses well ahead of the MPC meeting, in which the policy makers decided to keep the policy rate at 2.00%, cited that the current monetary policy stance is “sufficient to pave a steady growth path in the next year, and consistent with the long-term financial stability objective”. On the other hand, domestic consumption remained the main support to the 3Q2014 GDP, despite the slow expansion as expected.
• In general Indonesia government bond market traded up as bidding interest starts to show up. Some market players tried to do bottom fishing in a quiet market with most players sidelined pre-FOMC. In addition, BI still showed bid to support the market, sending down yield curve overall by 3-5 bps.
• Asian dollar credits further widened amid muted market on Wednesday, as investors were away for holidays. Also, we think that some investors preferred to stay sidelined ahead of the FOMC meeting outcome.