CIMB Daily Fixed Income Commentary - 16 March 2015

Good Morning,

Market Roundup

• US Treasury yields inched lower, on the back of weaker-than-expected data points from economic releases. However, the impact was partially offset by profit taking, amid cautious sentiment ahead of FOMC meeting scheduled this week, which may be decisive of hiking interest rates earliest in June this year.
• On Friday, Malaysian government bonds consolidated with yields mostly unchanged from prior day’s levels. We think levels had little motivation to move, as after Bank Negara held the Overnight Policy Rate steady at 3.25% the week prior, shorter tenor securities remained supported as selected players are still pricing in outlook for easier monetary policy direction.
• Thai government bonds continued to weaken, with foreign investors leading the net selling – they were net sellers of Bt7.65 billion of THB denominated bonds Friday after already net sellers of Bt9.5 billion the day prior. Govvies fell as the Baht remained weak, at 32.928 late Friday, following through after BoT’s unexpected rate cut.
• Indonesian government bonds continued its rally even though IDR currency remained weak. We were seeing local buying flows driving the market amid a lack of fresh supply.  Unlike in the past few days, foreign names weren't seen in the market. Transaction volume dropped to IDR7.35 trillion.
• Asian dollar denominated bonds were supported Friday when risk appetite were boosted by gains along the stock market firm US Treasury trading overnight. There was also better sentiment along HY Chinese papers, as Kaisa continued to show some improved levels. In addition, CDS levels were tighter, even as Asia’s macro outlook looked less than upbeat, recent monetary tightening has sparked demand for Asia’s credits.