CIMB Daily Fixed Income Commentary - 11 May 2015

Market Roundup

• US Treasuries recovered losses, after the April NFP report came in softer-than-expected, which spurred better buying activities in the market on Friday. The April NFP report was just shy of consensus at 223k new jobs added in April (consensus was 228k). Also, the prior month’s number was revised down to just 85k from 126k estimated before. Meanwhile, unemployment rate inched lower from 5.5% to 5.4% during the same period, the lowest since 2008.
• USD drew better support after the decent NFP figure released on Friday. EUR/USD edged lower to near 1.2000, after reaching the toppish level around 1.1347 last week, while we expect resistance at 1.1400 in the near term.
• Malaysian sovereign bonds dealt mixed, as sentiment remained weak heading toward Friday’s US NFP report. This week, we expect the MGS to continue to trek the UST movement; and much of the coming week’s UST direction will depend on the April NFP print-out. On data front, we have the 1Q2015 Malaysian GDP data on tap. Consensus expectation is for a growth of 5.4% yoy.
• Thai government bonds closed firmer, led by some buying-on-dips interest after the sell-off event earlier. However, we saw trading volume moderated from Bt37 billion to Bt22 billion, amid cautious trading activities while players awaited for the US NFP report on Friday.

·  Indonesia Government bonds were supported on Friday on BI's buyback auction.  BI opened buyback auction in the morning on benchmark series with target IDR3 trillion, by awarding IDR2.3 trillion out of IDR3.5 trillion of incoming bids.  Market stabilized after the auction, while trading volume improved to IDR15.4 trillion.

• Secondary trading in Asian credit market was seen with improved bidding interest, following the recovery in UST market. Aside, market played down the concerns on the contraction in both exports and imports recorded in April, with anticipation of further stimulus move from PBoC.