CIMB Daily Fixed Income Commentary - 27 May 2015

Market Roundup

• US Treasuries posted gains on the back of sell-off in stock markets, which were driven by the Yellen’s speech last week, and series of positive economic data releases after the markets reopened on Tuesday following a long weekend. To recap, the Fed chief mentioned that “it will be appropriate for raising the Fed Fund Rate target this year, if the economy continues to improve as expected”.
• Ringgit govvies were largely unchanged amid thin trading interest. Market highlight was on the reopening of 7-year GII, which was announced with an issuance size of RM3 billion. WI was last heard at 3.91/88%.
• Thai govvies recovered on the back of improved sentiment, alongside the subdued April customs exports, which declined by 1.70% on a year-on-year basis. However, the April reading came better than 3.30% contraction forecasted by consensus. On the other hand, imports shrank by 6.84%, in line with economists’ estimate, which translated into a trade deficit of $523 million.
• Indonesia government bonds dealt weaker on May 26 nearing auction hours, as market sold auctioned bond especially FR70 prior to the auction cut-off time. However market recovered most of the losses after auction result announcement, as government downsized the issuance to IDR7.2 trillion from IDR10 trillion initial target, causing less supply than expected. Incoming bid was IDR11.6 trillion, and 60% of the incoming bids went to FR70 (btc: 1.7x). Aside, trading volume jumped to IDR14.1 trillion.
• Asian credits closed mixed, amid thin profit taking activities, possibly paving way for anticipated new issues. Beijing State-owned Asset Management’s 10-year tranche was quoted wider at 194bps, while China Aoyuan May’28 widened from 10.98% to 11.03%.