CIMB Daily Fixed Income Commentary - 21 April 2015

Market Roundup

• US Treasuries posted losses, pressured by thin profit taking activities, amid the absence of fresh guidance from major economic indicators early the week. The New York Fed chief Bill Dudley warned that “the normalization of interest rates may create significant challenge for emerging market economies which are receiving large capital inflows in recent years.” He added that the US interest rate should be about 3.50% with inflation grows to 2.00%
• Ringgit denominated govvies strengthened further amid thin buying interest, in conjunction with firmer MYR on Monday. Total transaction was moderate, totalling RM2.1 billion, led by trades done along MGS Oct’20, Sep’22 and Apr’30.
• Thai sovereign bond yields closed pretty much unchanged early this week, as players awaited for fresh catalyst as well as heading towards the dual auctions for LB21DA (Bt20 billion) and LBA37DA (Bt9 billion), which will be conducted on Apr 22. In addition, daily volume shrank from Bt14.1 billion to Bt10.4 billion amid lacklustre trading interest for government bonds.
• Indonesia government bond market traded in tight range for most of the day, however nearing closing hours, market traded up with buying flows apparent in 10yr benchmark bonds, sending down yield curve across. Market generally quiet on Monday, most popular bonds traded today remain 3yr sukuk retail bond (SR07) followed by all benchmark series. MoF plans to have Syariah bond auction today, indicative target IDR 2 Trillion. Trading volume was very small amounting IDR 5.7 trillion only.
• Asian credit market was quiet, while sentiment remained steady despite the PBoC decided to lower the RRR by 100bps during the weekend. Elsewhere, iTraxx Asia ex-Japan IG Index tightened by 1bp to 108bps. Kaisa bonds were again in the limelight, as investors were concerned by the possible default on the coupon payments dated late last week. Kaisa Mar’18 dealt about 3pts lower to 59.04pts, while Kaisa Sep’17 dropped by 7.5pts to 59.01pts on Monday.