CIMB Daily Fixed Income Commentary - 17 February 2015

Good Morning,

Market Roundup

• US market closed on the Presidents’ Day. Last Friday, the US Treasury yield curve steepened, driven by softer demand for the safe haven assets, after the ECB extended funding limit by EUR5 billion for the Greek banks, coupled with the ceasefire agreement in between Ukraine and Russia.
• Ringgit-denominated government started the holiday-shortened week weaker, continuing from last week’s losses. Flows were thinner as activities wind down ahead of the Lunar New Year holiday, but there was still late net buying interest due to bargain hunting. Selected govvies yields were higher about 0-3bps before the late interest came in.
• Thai government bonds weakened with yields up more than 10bps along selected tenors though the baht was hovering around firmer levels by late Monday. Sentiment was affected amid the release of the 4Q2014 GDP data.
• IDR government bond market rallied on overwhelming demand in bond auction, added by better-than-expected $709M Jan trade surplus. MoF targeted IDR 12T in Monday's bond auction and issued just at that amount despite incoming bid at 3 times MoF target (36.09T). 50.8% of the issuance was on FR70 (10yr) benchmark bond. Trading volume reached IDR 15.57 trillion, slightly bigger than previous week average.
• Asian dollar denominated bond market was quiet as we opened the holiday-shortened week. However, quoted spreads widened on Monday, as sentiment was sapped after the rise in US Treasury yields last week. Spreads along IG names were around 5-10bps wider, though there was some pickup along selected names. HY sovereign papers were also weaker, with Indo and ROP names down 0.25 points average.