Fixed Income Daily Pulse, 11 May 2015

The day’s trade recap (from our trading desk):

·         The week started off rather bullish, as there was a short early morning rally when the market saw opening bids at last week’s offer. Focus was mainly on the 5-year MGS, which saw the yields easing by 4 bps and RM359m was done throughout the day while the 5- and 8-year GII traded RM140m and RM110m respectively when yields were coming off across the curve. Market was quiet post lunch and nothing much was traded during the afternoon session. Over the GG/AAA segment, Telekom Malaysia ‘06/21 and ‘04/23 were well bidded, which saw the yields traded 5 and 3 bps lower to 4.23% and 4.33%, with collective volume of RM35m. Meanwhile, 2022-2028 tranches of PLUS bonds traded mixed to settle at a range of 4.25%-4.57%. Elsewhere in the AA segment, notable trade is UEM Sunrise ‘06/19 and ‘06/21, which traded mixed to 4.44% and 4.62% respectively, with RM35m changed hands.    MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.330 -2.0 0 5-yr 3.580 -4.0 359 7-yr 3.780 -3.0 40 10-yr 3.880 -3.0 30 15-yr 4.060 -3.0 3 20-yr 4.200 -2.0 1 30-yr 4.600 -2.0 10 IRS Closing Rates IRS Closing Yld (%) Chg (bp) 1-yr 3.645 +0.5 3-yr 3.685 0.0 5-yr 3.865 -2.5 7-yr 4.035 -1.0 10-yr 4.233 +0.8 Source: Bloomberg, AmBank

               

  

Local News:

·           Malaysia’s industrial production increased at a faster-than-expected pace in March. Production in the manufacturing sector grew 6.3% y/y in January from 4.0% in February, helped by positive contributions by electrical and electronic products. Output in the mining and electricity sector advanced 9.2% and 3.8%, respectively.

•     The international reserves of Bank Negara Malaysia amounted to US$105.8 billion as at 30 April 2015. The reserves position is sufficient to finance 8.0 months of retained imports and is 1.1 times the short-term external debt.