CIMB Daily Fixed Income Commentary - 16 January 2015

Good Morning,

Market Roundup

• US Treasuries strengthened drastically, after the Swiss National Bank surprisingly removed the exchange rate cap in between CHF and EUR, which subsequently triggered heavier flows to the safe haven assets. On top of that, market viewed that the ECB may dish out a larger-than-expected amount of bond purchasing programme, which led to the surprise move by the Swiss National Bank. The 10T yield fell sharply from the intraday-high of 1.90% to test the low of 1.70%.
• Malaysian Government Securities rallied on Thursday. Support for the market came in the form of prior day’s gains in global crude oil prices (even though prices fell again on Thursday), a firmer ringgit (USD/MYR around 3.5587 Thursday from 3.5938 a day before) as well as overnight gains along the US Treasuries market.
• On Thursday, Thai government bonds closed mixed, mostly affected by foreign investor net selling and profit taking activities, after recent strong gains. Despite that, the baht was seen on firmer footing, hovering near 32.755 late Thursday versus 32.760 a day prior and 32.850 last week.
• Indonesia government bonds rallied on offshore inflows Thursday, with foreign investors seen mostly buying into FR70 (10 year bonds) and 20-year benchmark FR68. Shorter dated 5-year bonds and below were also popular, sending yields down across the curve.
• Asian dollar credits moved mixed on Thursday. Sentiment was again pressured by China credit worries, specifically from the Chinese HY property segment. Of these, Reuters showed Fantasia 19s fell 20 points to 55, as authorities in Shenzhen blocked Fantasia’s sale of properties.