CIMB Daily Fixed Income Commentary - 14 January 2015

Good Morning,

Market Roundup

• Oil price slump and risk aversion sentiment sent the US Treasury yields marginally lower on Tuesday. However, the positive movement was largely capped by the profit taking activities. We think that the market may see some correction in the near term after the long rally.
• WI trading of the upcoming new 7-year GII was last heard at 4.26/22% or lower versus the prior day’s 4.30/25%. Along the secondary segment, players picked up longer dated bonds, as they reacted further to tumbling global crude oil price and impact on inflation as Brent fell to around US$46 per barrel Tuesday after closing 2014 at US$57.33. Also, ringgit IRS rates were spotted down 2-4bps.
• Benchmark Thai government bonds showed gains Tuesday though non-benchmark papers saw some mixed movements. Support was still evident for Thai bonds ahead of the MPC later this month, and despite possibility BoT will not cut rates. Benchmark yields fell 4bps each along the 5-, 10- and 15-year bonds.
• Benchmark Thai government bonds showed gains Tuesday though non-benchmark papers saw some mixed movements. Support was still evident for Thai bonds ahead of the MPC later this month, and despite possibility BoT will not cut rates. Benchmark yields fell 4bps each along the 5-, 10- and 15-year bonds.
• The first government Syaria auction of 2015 was a successful one. The government issued IDR6.87 trillion of bonds and bills from incoming bids of IDR 13.7 trillion. This resulted in buying action from market participant in the conventional bonds. However, govvies trading volume decreased to IDR7.94 trillion on Tuesday from IDR11.51 trillion a week earlier. The most active papers were FR70, FR68 and FR71, the benchmark bonds.
• Asian dollar denominated bond spreads mostly tightened on Tuesday, with support seen along IG bonds as well as bargain hunting along Chinese property names. Kaisa bonds saw demand, after HSBC reportedly granted waiver on a ‘breach’ after Kaisa had failed to repay a loan. Kaisa also said it was in process to hire a restructuring adviser.