CIMB Daily Fixed Income Commentary - 5 February 2015

Good Morning,

Market Roundup

• US Treasuries posted gains along the curve, following the retreat in oil prices from the recent highs, in conjunction with weaker-than-expected ADP Employment data. Brent crude oil headed lower from $57.91/bbl to $54.16/bbl on Wednesday, while ADP Employment showed a reading of 213k in January against 223k of consensus estimate.
• Malaysian government bonds strengthened further on the first day of trading in February. As downshift in the USD/MYR pair boosted interest along ringgit govvies, with levels hovering near 3.5591 late Wednesday against 3.6300 the day previous. Yields fell about 3-9 along the 5-7 year papers. Meantime, IRS rates came down 2-3bps.
• Thai government bonds closed weaker whilst the baht pared gains Wednesday. USD/THB was hovering near 32.63 versus a daily low of 32.55. The same day, the government sold Bt9.0 billion of long tenor LBA37DA. Demand as measured by the bid-to-cover ratio was decent at 1.65x. Next week, the government is due to sell Bt5.0 billion of 15-year inflation-linked bonds ILB283A.
• IDR government bonds were traded down following Tuesday's bond auction. Foreign names got into some selling action while local players also trimmed positions. Price drop-off was felt especially along the bellies to long end of the curve, with FR71 (15- year), being Tuesday's auctioned bond, accounted for 30% of market transactions, followed by on-the-run FR70 (10-year bonds) and FR68 (20-year). The market provided support bid at current yield until closing hours. Total volume was still big amounting IDR19.6 trillion.
• On Wednesday, Asian dollar credits were mostly traded firm. Sentiment was aided by lessened worries over in Europe. Hopes increased of resolution between the new Greece government and the EU. Earlier in January, there were fears that the new government would backtrack on austerity measures placing the debt aid from the EU to Greece at stake. New Finance Minister Yanis Varoufakis was heard saying the government would no longer call on creditors to write off part of Greece’s €315 billion debt and would propose debt swaps, thus maintaining Greece on the debt program.