CIMB Daily Fixed Income Commentary - 26 February 2015

Good Morning,

Market Roundup

• US Treasury yield curve ended flatter, with the 2T yield rose substantially by 5bps amid profit taking activities. On the other hand, market continued to view that the Fed may delay the timing for an interest rate hike after Yellen testified on Wednesday, largely due to the low inflation. However, she mentioned that the central bank may begin normalizing the interest rates even before the upticks shown in inflation, as long as it anticipates the inflation acceleration and stronger job market conditions.
• Ringgit govvies closed mixed, with better bidding interest seen along the GII papers. The government bonds posted gains in earlier session, following the strengthening MYR, as USD/MYR headed lower from 3.6420 to 3.6270 during noon. However, the rally was short-lived, as gains were reversed by profit taking activities in later session. Elsewhere, WI for the new 5-year GII was last done at 3.80%, 2bps lower than a day before.
• THB denominated government bonds strengthened, following UST movement, which was triggered by dovish Yellen’s statement. Similarly, the Thai IRS curve also ended flatter. Meanwhile, foreign players continued to be the net buyers for the fifth consecutive day since last Thursday, with total amount of Bt1.35 billion recorded on Wednesday.
• IDR bond market went up on buying interest backed by offshore names, most of buying action was seen around 10yr bucket, led by FR70 benchmark (13% of total traded volume). Overall, foreign bond holdings went up IDR 6.4 Trillion since BI rate cut last week (data as of Feb 24th).
• Dollar credits were on a stronger footing, as sentiment improved following the stronger-than-expected January China Manufacturing PMI release, dovish comment by Fed chief Janet Yellen, and approval of Greek government’s reform plan. On the other hand, Shimao Feb’22 weakened marginally from the toppish level of 101.63pts to 101.61pts.