CIMB Daily Fixed Income Commentary - 11 February 2015

Good Morning,

Market Roundup

• US Treasury yield curve steepened, as the longer dated papers continued to post losses on Tuesday. However, front end of the curve was pretty firm in contrast. The 10T headed higher and tested the resistance of 2.00%, the highest level since Jan 8.
• Malaysian govvies were under heavier selling pressure, particularly along the front end and bellies of the curve. Market was pretty active on Tuesday, as daily volume surged from RM1.5 billion to RM3.7 billion. Saw better buying interest along the short dated bonds with maturity less than 2 years, such as MGS Feb’15 and Jul’16.  
• Thai govvies ended weaker amid quiet market, with daily transaction dipped further from Bt10.8 billion to Bt8.7 billion. At this juncture, we think that short term bonds were better cushioned against the mild selling interest.
• Indonesia government bond market continued trending lower, as some selling action were seen along the fr70 (10yr) and fr68 (20yr) benchmark series. Market was still quiet on Syariah auction day, with MoF targeted IDR 2T issuance. Government received 11.6T incoming bid and decided to issue 2.3T of Syariah bonds, and government cancelled 25.5yr PBS7 auction, from total of 4 auctioned series (6m SPN-S, 1.5yr PBS8, 5.5yr PBS6, 25.5yr PBS7). Trading volume was relatively big amounting IDR 15.2 trillion and FR71 trades were dominating the market.
• Market highlight was along the regional HY names, which were under selling pressure triggered by arising UST yields. The long dated Indo Jan’45 and Pertamina May’43 extended losses, and quoted 1.00-1.25pts lower on Tuesday.