CIMB Daily Fixed Income Commentary - 23 April 2015

Market Roundup

• US Treasuries posted losses and concerns over Fed eventual rate hike came into play again, as home sales numbers beat earlier consensus estimates. The yield curve also steepened, with 10- and 30-year bonds up 7-8bps on Wednesday.
• Existing home sales was 5.19 million (annualized number) in March or a rise of 6.1% mom against earlier expectation of an increase of 3.1%. Up next is new home sales which consensus expectation show a drop to 515k in March from 539k the month earlier. We also await weekly jobless claims and durable goods orders for March.
• The US dollar strengthened against the yen, with USD/JPY hovering near 119.94 this morning, with talk of Fed rate hikes again resurfacing after the printout of better-than-expected existing home sales numbers.
• Ringgit govvies ended firmer, amid decent bidding interest clustered along the bellies of the curve, partially driven by stronger MYR against USD, as USD/MYR drifted lower to 3.6110. On the macro side, headline inflation came in at +0.9% YoY for the month of March, within market expectation.
• Thai government bonds reversed losses and strengthened, guided by decent foreign buying flows. Meanwhile, USD/THB moved in lower range of 32.34-32.38, providing support to the government bond market. In addition, daily volume rose drastically from Bt14.9 billion to Bt46.3 billion, led by two government bond auctions conducted on Wednesday.

·  IDR bond market opened a bit stronger on the back of firmer IDR. USD/IDR shifted lower to 12910 late Wednesday, after hovering at 12950 earlier the day.

• Focus was on the $6.4 billion gigantic deal from Sinopec during mid-week in Asian credit market. Sinopec priced its 5-, 10- and 30-year bonds at T+125bps, T+145bps and T+152bps each, much tighter than the initial guidance levels of T+145bps, T+160bps and T+180bps respectively, while total orders received surpassed $15 billion. The 5-year paper was seen 2bps tighter in secondary trading, while 10- and 30-year tranches were held firm.