CIMB Daily Fixed Income Commentary - 17 March 2015

Good Morning,

Market Roundup

• US Treasuries extended gains, guided by soft data points from the latest economic releases. Industrial production grew by 0.1%, below consensus estimate of 0.2% growth, while the Empire Manufacturing Index dipped from 7.78 to 6.90 in March.
• Ringgit government bonds dealt mixed amid muted market, with trading volume recorded at about RM1.1 billion on Monday. Market highlight was along the bellies of the curve, which included MGS Jul’24 and Sep’25. On the other hand, the IRS curve bull-flattened, driven by heavier receiving interest, while the 3-month KLIBOR fixing was seen unchanged.
• Thai govvies were held stable, after continuously weakened late last week, amid foreign selling pressure, due to the weaker Baht. On the flipside, market was relatively quiet, as the daily volume shrank drastically from Bt22.4 billion to Bt13.3 billion.
• Indonesia government bond market weakened ahead of today’s bond auction and BI MPC meeting. Softer tone felt in bond market as Rupiah reached 13,250 before BI intervened in currency market. BI also appeared in bond market on Monday, bid 20yr benchmark bond to provide support. Today is going to be a crucial day as BI rate decision will decide bond and currency movement. Most of the analysts predict BI rate will be unchanged at 7.50%. Transaction volume was about average amounting IDR 12.91 trillion.
• Dollar credits weakened, triggered by some profit taking activities amid cautious stance ahead of the upcoming FOMC meeting. Also, we reckon that investors also paved way for primary pipelines. Newly issued Petronas tranches were found quoted wider, reacted to the sharp decline in crude oil prices last Friday.