CIMB Daily Fixed Income Commentary - 03 Jul 2015

Market Roundup

• US Treasury yield curve ended lower and steeper on Thursday, reacting to the lower revised NFP readings for May and April, despite the June NFP number came close to expectation on Thursday. We believe that the lower job gains in previous months, alongside slower-than-expected wage growth of 2.0% in June, eased some speculation on an earlier rate hike. On top of that, we reckon safe haven flows also came into support ahead of the Jul 5 Greek referendum.
• Malaysian government bond market remained active, despite daily volume shrank drastically to RM3.7 billion from RM7 billion registered a day before. The govvies posted little gains, which were capped by profit taking activities ahead of the release US NFP number.
• Thai government bonds were dealt weaker after market reopened post Mid-year holiday, tracking the losses in UST a day earlier. Daily volume was moderate at Bt15.3 billion, while flows were slanted toward medium dated papers such as LB21DA and LB236A.
• It was a quiet day for Indonesia government bond market with better selling interest from interbanks on Thursday.  Goverment will hold bond auction next week with targeted amount of IDR10 trillion, which includes 2 short tenor SPN (3-month,12-month) and FR56 (10-year) reopening and new series FR72 (projected 20-year benchmark).  We expect to see market will stay in the range with small downside risk. Meantime, volume continued to fall to IDR 8.2 trillion.
• Asian dollar credits were dealt firmer, alongside the gains in most equity markets on Thursday. iTraxx Asia ex-Japan IG Index tightened by 2.25bps to 109bps.