CIMB Daily Fixed Income Commentary - 19 Jun 2015

Market Roundup

• US Treasury yield curve further steepened, amid quick profit taking after seeing the long dated bond yields decline post FOMC. 10T yield dropped to the intraday-low of 2.26%, before eventually rose and closed at 2.34%.
• Ringgit government bonds closed firm with yields down 0-5bps along the 5-year to 15-year MGS papers. Stronger gains were noted along the short tenor 3-year MGS but transactions not done on very high volume. A firmer ringgit against the dollar (nearer to 3.7000 late Thursday from 3.7573 a day before) and a firm UST overnight, ensuing from FOMC’s decision to hold rates, supported sentiment in the domestic market Thursday.
• Thai baht denominated government bonds posted gains on Thursday, boosted by overnight strength along the US Treasuries market after the FOMC held the Fed Funds Rate. Yields along medium tenor bonds with around 10 years maturity were spotted about 5bps lower for the day. The benchmark 10-year bond maturing Dec’25 was about 2.94% by Thursday’s close, down 5bps.
• Indonesia government bond market rallied following last night's Fed news, Bond gapped higher by 50bps in price on opening, with foreign buying flows seen in all benchmark series, amid biddish market. MoF held debt switch auction on Thursday, swapping shorter-dated bonds (maturity 2016-2019) with destination bonds FR53 (6-year), FR71 (15-year) and FR68 (20-year). Government received IDR5.4 trillion incoming offers and swapped IDR2.95 trillion. BI held BI MPC meeting today, as widely expected BI rate was unchanged at 7.50%. Volume jumped to IDR21.2 trillion.
• Asian dollar bonds were firmer on Thursday, supported by small gains along the US Treasuries market overnight on the heels of the FOMC decision to hold rates and policymakers pretty much still on the dovish side. We noted medium tenor high grade papers, including sovereign Malay names, were tighter 0-5bps on the day.