CIMB Daily Fixed Income Commentary - 28 April 2015

Market Roundup

• US Treasuries pared gains with the anticipation of increasing supplies (due to auctions), coupled with cautious sentiment heading towards FOMC meeting. Despite the both Composite PMI and Services PMI showed softer preliminary readings in April at 57.4 and 57.8, compared to prior month, the readings made little impact to the market and continued to see the UST yields to climb on Monday.
• Ringgit govvies posted little gains, benefited by the strengthening trajectory in MYR, as USD/MYR shrank further to test 3.5600 on Monday. Secondary trading remained active, despite the total transaction declined from RM4.9 billion to RM4.0 billion.
• Thai sovereign bonds saw profit taking pressure, sending the yields a tad higher at the bellies and far end of the curve, after the players priced in the possibility of a BoT rate cut since late last week. In our opinion, another rate cut by the central bank may be a little too early after the 25bps cut in March.
• Indonesia government bond market sell-off on slower economic growth as confirmed by corporate earnings numbers from some of the largest local companies. Added fuel to the fire was selling action done mostly by foreign banks to trim position ahead of today's bond auction, in which MoF aim to issue IDR10 Trillion. Trading volume remained small amounting IDR5.5 trillion.
• Asian dollar credit market was muted, as investors awaited for more primary deals to emerge. Malay Apr’25 tightened by 3bps to T+108bps, and Petrol Mar’25 was seen about 5bps tighter at T+120bps.