CIMB Daily Fixed Income Commentary - 12 January 2015

Market Roundup

• Despite the December non-farm payrolls came decent at 252k, and unemployment rate dipped further from 5.8% to 5.6% during the same period, the market was disappointed by the 0.2% wages decline and reacted with strong buying interest in US Treasuries on Friday.
• Ringgit denominated government bonds strengthened ahead of weekend, as the MGS benchmark yields were pared lower along the curve, amid improved buying interest driven by stronger Ringgit. Meantime, secondary trading activity remained heavy at RM4.8 billion, with players focused on MGS Jul’16 (unchanged) and MGS Apr’30 (-2bps).
• Thai government bonds scaled back gains on the back of profit taking activities on Friday. On top of that, daily volume stayed at the low side of Bt12.3 billion, despite increased marginally from Bt11.0 billion recorded a day before.
• Another bullish day for IDR government bond market on Friday with offshore inflows appeared mainly in medium-to-long tenure bonds. Trading volume on Friday was about IDR 11.4 trillion and FR68 (maturing in 2034) was the heaviest traded bond (IDR 4.6 trillion). With Indonesian government only absorbed USD 4 Bio from USD 19.3 Bio incoming bid on new issuance of USD global bonds (oversubscribed 4.8x), looks like some of buyers allocated their funds to IDR bond instead, sending yield lower across the curve.
• Asian credits held firmer on Friday, guided by the improved sentiment. Meantime, China property names dealt mixed, amid better bidding interest driven by some bottom fishing activities. Agile perp edged lower from 67.70pts to 67.43pts, while Citic perp inched up by 0.03pt to 112.55pts, and Kaisa Mar’18 rose from 33.51pts to 36.51pts.