CIMB Daily Fixed Income Commentary - 25 February 2015

Good Morning,

Market Roundup

• US Treasury yields declined, after the Fed chief Janet Yellen revealed that the Fed will not necessarily raise interest rate after the removal of the word “patient” from the policy statement. Furthermore, she indicated that the central bank will have the flexibility in deciding the interest rate hike timing on a “meeting-by-meeting basis”. Although the job market conditions improved, Yellen added that the inflation and wage growth remained too low.
• Malaysian government bonds recovered losses, amid increased speculation over the possibility of interest rate cut in the upcoming MPC meeting scheduled on Mar 5. On top of that, Bank Negara Malaysia governor Zeti mentioned that “the current monetary policy remains accommodative”, sounded neutral in our opinion.
• Thai government bond yields hovered at prior levels amid a lack of fresh catalyst, while the 2-year benchmark yield dipped notably by 3bps amid better buying interest along the front end of the curve.
• IDR denominated bonds rangebound ahead of Yellen’s congressional testimony, with most transactions dominated by benchmark bonds along the bellies and far end of the curve. Also, the weaker IDR made little impact to the bond market, despite USD/IDR remained toppish around 12,900 level.
• Asian dollar credits dealt firmer, partially driven by the lacklustre primary deals. Oil-related papers were seen well supported, while PTTEP perp traded 0.12pt higher at 100.07pts, after Moody’s maintained PTT’s rating at Baa1, as the credit rating was strongly backed by the sovereign support, despite weaker credit profile amid low energy prices.