CIMB Daily Fixed Income Commentary - 06 March 2015

Good Morning,

Market Roundup

• US Treasury yield curve ended marginally steeper, while players waited at the sidelines for guidance from Friday’s nonfarm payroll reports. Meantime, the 0.2% contraction in the January factory orders reported on Thursday, gave little downward pressure to the UST yields.
• Malaysian government bonds strengthened on little buying interest, with yields inched lower along the MGS curve. Notably, the 5-year benchmark closed 5bps lower at 3.62%, amid stronger buying interest. The central bank held the policy rate at 3.25%, in line with our expectation. The monetary policy statement sounded neutral, remarking that the monetary policy remains accommodative and supportive of economic activity. On top of that, the policy makers highlighted that the inflation may trend higher, but to be below its historical average.
• Thai government bonds closed mixed, amid a lack of clear market guidance, after market reopened post Makha Bucha Day. Meanwhile, USD/THB trended higher and tested 32.44, after hovering at the lower range of 32.29-32.41 earlier this week. We think that it may see some selling pressure with further upticks in the currency pair.
• IDR government bond market continued the selloff following USD/IDR movement which broke the 13,000 level. Panic selling was seen across the curve in early hours. However, market improved in the afternoon after BI had intervened the IDR currency. Market volume dropped to IDR 13 trillion from IDR 16 trillion on Wednesday. The most active trades were benchmark series FR70 and FR71.
• The dollar credits were quoted wider amid quiet market. Alibaba Nov’24 recovered from prior day hiccup, quoted 3bps tighter at 157bps on Thursday. Regional HY names also strengthened, as Indo Jan’25 traded 0.13pt higher at 102.88pts, and Phili Jan’24 moved 0.18pt higher at 111.51pts.