CIMB Daily Fixed Income Commentary - 04 Aug 2015

Market Roundup

• US Treasuries extended gains following mixed economic releases and stock market decline early this week. The 10T yield dropped to 2.15%, with next technical support at 2.10%.
• Malaysian sovereign bonds were dealt mixed, despite Ringgit further weakened against USD, as USD/MYR was seen traded above 3.8500 early this week. Market was muted, as daily transaction fell drastically from RM5.3 billion to RM1.8 billion.
• Thai government bonds posted gains, reacting to the sharp decline in UST yields last Friday. Aside, LB196A remained actively traded, contributing Bt6.6 billion on Monday.
• Bond traded down on foreign selling pressure amid weakening IDR. However, we have seen offshore flows buying in 7-10y tenors. The selling pressure met offshore buying interest thus market was generally well supported. CPI data released on Monday, MoM CPI was 0.93%, above survey at 0.74%, YoY was 7.26% while core data was better than survey (5.00%) at 4.86%. We expect market will be supported from here, it may rally but think depend on today’s auction. Trading volume improved to IDR10.1 trillion.
• Asian credits moved in sideways, while investors were anticipating for the upcoming primary deals to emerge. Meantime, regional CDS spreads further widened by 2-9bps, amid weakening domestic currencies.