CIMB Daily Fixed Income Commentary - 08 April 2015

Good Morning,

Market Roundup

• US Treasuries dealt mixed, amid a lack of fresh major catalyst in the market, while focus was mainly on the 3T auction held on Tuesday.
• The auction for the new 10-year GII maturing Oct’25 attracted strong demand as we had suspected, coming alongside fresh offshore demand as Malaysian govvies sukuk are included into the Barclay’s Global Aggregate Index. Demand as measured by the bid-to-cover ratio was a firm 2.75 times for the large RM4.0 billion tender. Average yield generated at the auction was 3.99%. WI was heard Monday at 4.00/92%. Meantime, Ringgit government bonds closed mixed but GIIs were mostly steadier.
• USD/THB was dealt weaker on Tuesday while players pared down recent in pricing in of an end-April BoT rate cut, resulting in mixed closing for Thai government bonds on Tuesday. Shorter tenor benchmark govvies shed around 3-8bps on the day but longer tenor bonds saw yields spiking by as much as 10bps.
• Indonesian government bonds opened on weaker footing Tuesday, continuing previous day’s momentum with some profit-taking action seen in the 10-yearr and 15-year buckets. However the market was well supported with small buying action seen in the afternoon session especially on medium-to-longer end tenures. Aside, MoF held syariah bond auctions, issuing more (IDR2.635 trillion) than the originally planned (IDR2 trillion), with the market revealing interest on shorter dated 6m Syariah bills and 1-year securities, or accounting for 74% of total incoming bids (IDR5.4 Trillion). Trading volume was small but improved from prior day amounting to IDR8.7 trillion.
• Asian dollar bond trading remained quiet after the long holiday weekend in selected markets with levels showing mixed movement. However, we think some gains may be seen later this week, supported by recent UST rally.