CIMB Daily Fixed Income Commentary - 16 Jul 2015

Market Roundup

• US Treasury yields rose a tad before eventually settled lower, while highlight was on the Janet Yellen’s congressional testimony. The Fed chairwoman reiterated the interest rate normalisation is likely to happen by end of this year, but stated that the rate hike will be done gradually.
• Ringgit govvies hovered near prior levels, amid decent daily volume totalling RM2.4 billion on Wednesday. Meantime, flows were led by short dated GII papers, namely GII Jul’15 and Sep’15, which contributed combined volume of RM1.1 billion.
• Thai government bond market saw heavy trading volume amounting Bt49.1 billion, compared to Bt22.8 billion recorded a day ago, aided by the LB25DA auction. On top of that, LB196A remained actively traded, with total transaction of Bt15.9 billion. Elsewhere medium dated bonds such as LB206A and LB21DA were also well supported, pressuring the yields lower by up to 5bps.
• Indonesia government bond market was very quiet ahead of Ramadhan holiday, most market players sidelined. Market was mostly range traded for the past 2 days. June trade balance data was announced last Wednesday, trade surplus of +$477 Mio, a bit lower than predicted (+$496 Mio) and worse than last month (+$1077 Mio), however no reaction in the market post-data. Volume was very thin amounting IDR 3.8 trillion only.
• Highlight was on the latest primary deals, which flooded the Asian dollar credit market this week. Yongda’s 5-year bond was issued at T+220bps, 30bps tighter than initial guidance, while KEXIM priced 10-year floating rate notes at L+100bps. Korea Gas’s 10-year paper traded about 4bps tighter to 106bps.

The team at CIMB Fixed Income Research wishes all readers Selamat Hari Raya Aidilfitri.