CIMB Daily Fixed Income Commentary - 30 Jun 2015

Market Roundup

• UST rallied on the back of flows for safe haven, amid risk-off sentiment after the Greek authority imposed capital control. Meantime, DJIA and S&P 500 declined 2.0% and 2.1% each, while DAX Index closed 3.6% lower, driven by the intensifying Greek default tension.
• Ringgit govvies suffered losses amid selling pressure triggered by weak sentiment due to the potential Greek debt default, pairing with weaker MYR, as USD/MYR climbed further to near 3.7840 late Monday.
• Light trading interest kept the Thai sovereign yields closing near prior levels early the week, while sentiment was guarded ahead of the Greek debt repayment deadline on Tuesday. In the near term, we expect mild support to continue, partly due to the subdued domestic economic conditions. On top of that, we see strong resistance for the 10-year govvies benchmark at 3.20%.
• Indonesia government bond market traded down on Monday as Greece EU exit risk increased, market gapped lower on open with bid-offer spread widened to 75-100 bps in price. Some bottom fishing by banks were seen, however amount might be for regular size of IDR10-20 billion only. MoF held domestic USD bond auction, with an indicative target of USD500 million. Auction was oversubscribed as government received USD871.7 million incoming bids, and issued USD500 million (btc: 1.74x) at weighted average yield of 1.90138%. Transaction volume remained steady amounting IDR14.7 trillion.
• Asian credits were traded weaker amid hunt for safe haven, driven by bearish sentiment, as market generally viewed that Greece is more likely to default the loan repayment on Tuesday. iTraxx Asia ex-Japan IG Index widened from 108bps to 113.50bps on Monday.