CIMB Daily Fixed Income Commentary - 03 March 2015

Good Morning,

Market Roundup

• US Treasury yields surged, after the Personal Consumption Expenditures Price Index showed an uptick of 0.8% in January, as the personal income growth outpaced the personal spending growth, partially due to the lower energy prices. Aside, the February forecasted Manufacturing PMI reading came in at 55.1, a tad higher than the 54.3 estimated by economists, also aided to send the yields higher.
• MGS benchmark yields hovered at prior levels, amid cautious trading sentiment heading towards MPC meeting scheduled on Mar 5. In our opinion, MGS Nov’19 appeared to be attractive at 3.72%, against MGS Oct’19, which was last spotted at 3.61%.
• Thai sovereign yield curve shifted lower, guided by the softer-than-expected inflation number reported on Monday, as it spurred some interest rate cut decision in the upcoming MPC meeting slated for Mar 11. Headline inflation contracted by a larger margin of 0.52% in February, against consensus estimate of 0.48%. Meantime, core inflation came in a tad lower at +1.45%, from +1.64% recorded a month ago.
• Indonesia government bond market was quiet yesterday ahead of today's bond auction. Most market players sidelined, even after Feb CPI data was announced, still no reaction from the market. On CPI, Feb MoM numbers showed deflation (-0.36% vs prior -0.24%), deflation already expected by BI. Today MoF will target IDR 10T issuance from bond auction, 2T lower compared to previous auctions target this year.  Transaction was small yesterday and volume amounting IDR 11.66 trillion only.
• Dollar credits posted gains on Monday, with Chinese property names such as Cifi and Agile dealt firmer as buying sentiment driven by the PBoC’s easing measure, which lowered the key interest rate by 25bps to 5.35% over the weekend.