CIMB Daily Fixed Income Commentary - 22 Jun 2015

Market Roundup

• US Treasuries ended firmer, guided by demand in safe-haven assets, due to the Greek debt saga (even though EU leaders were reported in last ditch talks to reach a deal).The EU, IMF and ECB have so far unwilling to release a final €7.2 tranche of financing unless Greece agree to fresh reforms. In addition, we reckon that the less-hawkish tone by the Federal Reserve also drove buying interest, as the UST yields hovered near the highest levels on a year-to-date basis.
• Despite the USD weakness, EUR/USD failed to break 1.1400 amid cautious sentiment on Greek bailout saga, and headed lower from the intraday-high of 1.1384. However, sentiment was supported after the ECB increased the emergency liquidity assistance for Greece ahead of weekend.
• Malaysian government bonds strengthened further ahead of the weekend, after the Federal Reserve sounded relatively dovish during the latest FOMC meeting, pairing with recovery in Ringgit. However, Ringgit strength eased on profit taking pressure, heading higher to 3.7435 late Friday.
• Thai govvies continued to attract bidding interest, pressuring the benchmark yields a tad lower on Friday. On the other hand, daily volume was relatively thin at Bt14.7 billion, compared to Bt29.4 billion a day prior.
• Indonesian 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 credits dealt mixed, despite sentiment generally improved post FOMC meeting, investors remained cautious on the negotiation of Greek bailout. Aside, iTraxx Asia Ex-Japan IG Index tightened by 1.5bp to 110.5bps on Friday.