CIMB Daily Fixed Income Commentary - 19 January 2015

Good Morning,

Market Roundup

• US Treasuries weakened, as players took profit after the University of Michigan Consumer Confidence Index showed an upbeat reading of 98.2 for the month of January, in comparison with 93.6 recorded a month earlier.
• Malaysian government bonds posted gains, as a little rebound in oil prices and firmer ringgit fuelled interest, whilst overnight gains along the US Treasuries market boosted interest for the safer haven government bonds. The overnight trigger by Swiss National Bank to remove the cap between CHF and EUR spooked global markets and drove flows into the safe haven of the US Treasuries.
• Thai government bonds were traded weaker with foreign investors remaining large net sellers of baht-denominated bonds on Friday. Meanwhile, the baht itself strengthened to hover near 32.63 late Friday compared with 32.76 the day before. We think players remained wary ahead of the BoT policy rate decision later this month. Prospects for a rate cut may be boosting interest amongst domestic players but offshore ones may be cautious as the outlook for Thailand’s growth in 2015 remain uncertain – not to mention the baht hovering near its weakest against the US dollar since early 2010.
• The Indonesian government bonds market was quiet in early hours on Friday though with some buying tone. However, the market rallied in the afternoon session, after post the government announced cuts in the gasoline, diesel and LPG prices. Yields went down by 2-4 bps especially along the longer part of the curve. Foreign names were still behind the buying interests. Trading volume was IDR11.14 trillion and the most active bonds were FR70 and FR68.
• Asian dollar denominated bonds continued to be pressured, as risk appetite remained pretty small. The overnight action by the Swiss National Bank added to the risk aversion, on top of existing credit worries on Chinese property-related names.