Fixed Income Daily Pulse, 09 July 2015

The day’s trade recap (from our trading desk):

· Today was a more vibrant day with the market taking a bullish turn. There were keen bidders on the 7-year & 10-year MGS, with yields dropping as low as 3.90% and 4.02% by the end of the morning session. The curve flattened on the belly of the curve in which 7-year and 10-year yields were down by 4.5bps and 3bps respectively while the 3-year gained 3bps. The tenor spread for 20Y/30Y MGS is quite steep at the moment, with the 30Y MGS providing good value off the curve. In the GII space on the other hand, the outperformer bond was the 7-year GII in which it eased by 6bps resulting from some good buying interest at 3.97% level while the other GIIs remained quiet with little interest. The spread of GII against MGS is healthy at the moment with an average spread of 9bps. Apart from that, BNM has decided to maintain the OPR rate at 3.25% during today’s MPC meeting. The tone of the statement was largely unchanged from the statement before apart from the section where it highlighted the healthy local financial and FX market although recent global and domestic developments have affected the MYR exchange rate and domestic financial markets.  In the GG/AAA segment, Prasarana Malaysia Berhad ‘08/26 increased 2 bps to close at 4.439% with a total trading volume of RM30m. Meanwhile Woori Bank ‘02/16 eased 2 bps to settle at 4.134% with a total trading volume of RM85m. In the AA segment, Public Bank Berhad ‘12/16 remained unchanged at 4.338% with RM30m changed hands. Whereas Malaysia Airport Holdings Berhad ‘12/24 increased 1 bp with a total trading volume of RM50m. MGS Benchmark Issues MGS Closing Level (%) Chg (bp) Vol (RM m) 3-yr 3.260 +3.0 177 5-yr 3.640 -1.0 53 7-yr 3.910 -4.5 239 10-yr 4.030 -3.0 121 15-yr 4.210 -2.0 111 20-yr 4.320 -1.0 0 30-yr 4.750 -1.0 0 IRS Closing Rates IRS Closing Yld (%) Chg (bp) 1-yr 3.695 -1.0 3-yr 3.750 -2.0 5-yr 3.975 -3.0 7-yr 4.155 0.0 10-yr 4.370 -2.5 Source: Bloomberg, AmBank

               

  

Local News:

·          BNM Overnight Policy Rate remained unchanged at 3.25%.