CIMB Daily Fixed Income Commentary - 9 February 2015

Good Morning,

Market Roundup

• US Treasury yields surged on Friday, as players factored in the stronger-than-expected non-farm payroll and faster wage growth for the month of January. The latest non-farm payroll report showed robust job gains of 257k, while average hourly wages increased by 0.5% during the same period.
• Ringgit govvies dealt mixed ahead of weekend, as the positive movement was limited by the profit taking activities. Meanwhile, GII segment drew decent bidding interest after the recent rally in MGS, with heavier volume clustered on GII Jul’22 and May’24.
• Decent trading interest in Thai government bond market, with daily volume edged higher from Bt18.5 billion to Bt20.6 billion. Still see better selling interest in the market, as players preferred to keep the portfolio duration short. For shorter term bonds, we like LB193A (2.36%), which offered better value against LB196A (2.25%).
• IDR government bond market moved mixed, relatively quiet in market on Friday. Most actions were seen in 10yr benchmark FR70, dominated with 31% of total transaction volume. Looks like market players prefer to wait until US NFP and unemployment data. On the local front, Jan FX reserves went up to $114.25B from $111.86B on previous month. No impact on bond market post-FX reserve announcement. Total volume was IDR 12.1 trillion.
• Asian credits dealt firm on the back of improved risk sentiment, partially aided by the supported crude oil prices ahead of weekend. In secondary trading, the new Tencent 5- and 10-year papers were quoted at tighter levels of 157bps and 196bps respectively, while Exim Bank India 20s was quoted 2bp tighter at 153bps.