CIMB Daily Fixed Income Commentary - 13 March 2015

Good Morning,

Market Roundup

• US Treasury yield curve ended marginally steeper on Thursday, with yields initially declined on the back of weak retail sales number recorded in February. However, profit taking activities amid cautious sentiment heading towards next week’s FOMC meeting pushed the yields higher, erased the earlier gains.
• Bank Negara sold RM4.0 billion of the new 10-year MGS at average yield of 3.96%, tighter than prior day’s WI of 4.05/03%. The bid-to-cover ratio was 2.23 times which was decent for the large tender amount but smaller than the average bid-cover of 2.88 times at the five prior govvies auctions this year.
• Thai government bonds strengthened Thursday on safe haven bids, despite continued signs of offshore players net selling activity. At the same time, the baht remained weak, seen around 32.80 late Thursday after closing last week at 32.43.
• Indonesian government bonds were dealt firmer, supported by downward direction in regional monetary policy rates after the Bank of Thailand and Bank of Korea slashed interest rates this year. The market opened on firm footing, with gains seen along the medium to longer end of the government curve and due to local buying. The next Bank Indonesia policy rate meeting is March 17, after a rate cut was done at the last meeting in January (25bps cut in the BI rate to 7.50%)
• Asian dollar denominated bonds were traded mixed on Thursday after opening on the weak side. Focus was on the primary segment as Petronas issued multiple tranches include a 5-year sukuk (Wakalah), Meanwhile, Kaisa regained some of its early week losses but the overall Chinese real estate segment remained under pressure, prices down up to 0.75 points.