CIMB Daily Fixed Income Commentary - 24 Jul 2015

Market Roundup

• US Treasuries firmed further with yields down around their two-week lows, with the background of weak performing stock market pressured by weak corporate earnings reports. Also propping UST was continued weak commodity prices, which alleviated some inflationary pressures. The Sep WTI futures fell to below $49 per barrel Thursday.
• USD was spotted weaker with USD/JPY around 123.95 this morning and EUR/USD at 1.0990. Weak oil prices contributed to a weak stock market and lower UST yields and resulted in weaker support for the US Dollar. The Dollar fell back after given a boost from weaker than expected US weekly jobless claims numbers. The Dollar index was half a percent down on the day.
• The Euro rallied as the Greece parliament approved a second package of economic reform measures (which includes the likes of a new code for civil processes, in order to boost government efficiency). The new measures are hoped to allow Greece to access for as much as €86 billion in fresh loans.
• Malaysian government bonds were supported Thursday, which we think came mainly from offshore players. Focus were mainly on shorter tenor bonds, mostly ahead of rollover of maturing bonds as well as short supply of shorter tenor bills.
• Elsewhere, IRS rates were steady due to a lack of fresh market drivers. Meanwhile, the 3M KLIBOR remains stuck at 3.69%.
• At end of day, the latest foreign reserves number was due for release. Malaysia’s reserves showed a decline to $100.5 billion from $105.5 billion end of June.
• Thailand’s government bonds weakened on Thursday, amid the weak THB currency movement. Yields were seen about 4-8bps higher at midday. Our traders think there is persistence pressure for capital outflows with USD/THB above the 34.80 resistance level.
• Generally, Indonesian government bonds were traded up on buying flows especially in the 5-year bucket, continuing Wednesday's movement. Some buying was also seen along longer dated 15-year and 20-year tenures. We think the market will still be on better buying mode and start to take profit nearing bond auction in the first week of August. Trading volume improved to IDR 8.2 trillion.
• Asian dollar denominated bonds were aided by the Chinese stock market rally on Thursday whilst a batch of new primary offerings ensured added interest from investors. And a trio of new offerings from Chinese companies piqued market interest. China’s Bank of Communications launched $2.45 billion of Tier 1 papers which reportedly garnered $8.3 billion order book from 130 bids. Other Chinese names fresh to the market include China Minmetals and China Oilfield Services.