CIMB Daily Fixed Income Commentary - 26 January 2015,

Good Morning,

Market Roundup

• The announcement of the ECB’s bond purchases programme pressured the US Treasury yields lower along the curve, with the 10-year benchmark yield closing at 1.80% ahead of the weekend. Meanwhile, the 10-year German Bund yield dipped by 8bps to 0.36%.
• There was also caution ahead of the Greece elections. Reports out of Greece indicate leftist party Syriza was set to win though may not have enough support to form a government on its own. This was based on official projection from the interior ministry. Syriza was projected to win 150 seats in the 300-seat parliament with the backing of 36.5% of voters.  The concern is that Syriza is anti-austerity and had targeted to block the austerity program that Greece pledged in exchange for a €240 billion bailout from international creditors.
• Malaysian government bonds further strengthened amid positive buying sentiment, with bidding interest slanted towards bellies of the curve, which including GII Jul’22 and May’24. Aside, daily volume remained high at about RM5.9 billion, up from RM4.5 billion garnered on Thursday.
• Thai govvies strengthened, thanks to the ECB’s sizeable bond purchases decision, which eventually sent the global bond yields a tad lower heading towards the weekend. Trading volume surged from Bt26.1 billion to Bt39.7 billion, aided by the stronger buying flows.
• IDR government bond market rose again after ECB released QE's program. We are seeing inflows in early hours from various foreign names and send the YC went down by 15-20 bps. In the afternoon, we started to see profit taking action from local names. We will have sukuk auction next week.  We will see a strong demand for this auction given the current flush liquidity and new tenor 1.5y. Transaction volume was still huge amounting IDR 33.4 trillion and the most traded bonds were still FR70 and FR68.
• Asian credits strengthened across the board, after the ECB unveiled its EUR1.1 trillion worth of bond purchases programme beginning in March this year, which aims to revive economic recovery in Euro zone.  Along the recent issues, Woori Bank Jul’20 tightened by 4bps to 127bps, while Rizal Commercial Banking edged higher from 101.82pts to 101.89pts.