CIMB Daily Fixed Income Commentary - 02 March 2015

Good Morning,

Market Roundup

• US Treasury yields dropped by 3-4bps, amid weaker economic data releases on Friday. The revised 4Q2014 GDP growth came a tad lower at 2.2%, from 2.6% estimated earlier. Furthermore, the Chicago PMI reading appeared to be disappointing at 45.8 for the month of January, dropped substantially from 59.4 recorded a month ago.
• Malaysian sovereign bond yields inched higher on profit taking activities, amid a lack of fresh positive catalyst. Meantime, GII papers attracted better bidding interest in contrast to MGS papers, with yields pared marginally lower, while the new 5-year GII saw decent trading interest and stood unchanged at 3.78%.
• Thai government bonds closed flat, despite foreign players marked a 7-day consecutive net buying spree and continued to absorb the sovereign bonds. Aside, market highlight will be the February headline inflation report on Monday, which is expected to show 0.50% contraction.
• Indonesia government bond market traded down after BI governor said they expect IDR to depreciate further. IDR currency weakened after the news, went to above 12,900 level. Knee-jerk reaction on BI news was also seen in bond market with some bond selling, however the amount was suspected to be small and strong bidding interest on all benchmark bonds keep the market well supported.
• Asian credit market remained firm ahead of weekend, while HY sovereign papers fell following the surge in overnight UST yields.  In secondary market, Noble Jan’20 dropped further from 105.88pts to 103.25pts, while players were cautious and awaited for more updates on the company accounting issues.