Market
Roundup
- Ringgit denominated government bonds mildly weakened amid cautious sentiment. We think current steep valuations after the recent rallies, and in view of the stable interest rate outlook into the short to medium term, are limiting fresh net buying interest. Even as the MYR substantially strengthened against USD over the week, the rally in government bonds was quickly erased by profit taking activities. MYR was firm at 3.6240 late Friday after hitting 3.7240 mid-week. At the close, the 3-year MGS was at 3.33% (up 1bp week-on-week) and the 10-year MGS at 3.88% (also up 1bp).
- As for corporate bonds, trading has also been slow following the lacklustre govvies movement of late. Meanwhile, longer term investors had been dipping into the secondary market looking for longer tenor papers (especially in view of recent lack in sizeable primary deals) and leaving little interest for shorter tenor credits.
- US Treasury yields declined, reacting to the several soft economic data releases during the week, which included retail sales, Empire Manufacturing and industrial production. Furthermore, gains were supported by better demand for safe-haven assets triggered by stock market decline and growing concern on Greek debt issue.
- Asian credits were held steady last week, as risk sentiment improved alongside the rally in UST, pairing with heavier pipelines expectation. We continue to see market well supported with PBoC lowering the RRR by 100bps effective from Apr 20.
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