CIMB Daily Fixed Income Commentary - 05 Aug 2015

Market Roundup

• US Treasuries were under selling pressure, driven by profit taking and hawkish statement by Atlanta Fed President Dennis Lockhart, who supported a September rate hike, unless seeing significant weakness in economic reports.
• Ringgit govvies recovered some losses posted late last week, despite sentiment was seen bearish in conjunction with the weakening Ringgit on Tuesday. Upcoming focus will be on the series of economic data releases (trade data and FX reserves).
• THB denominated government bond yields edged lower, continue to track the overnight gains in UST. Also, we suspect that there were some speculative bets on rate cut well ahead of the MPC meeting, particularly after the Commerce Ministry revising the annualised inflation target to lower than 0.6-1.3%, accompanied by the Thai National Shippers’ Council’s projection of a larger decline in exports this year.
• Indonesia government bond yield curve steepened on auction day, with buying flows were seen in 7- to 10-year buckets. On Tuesday's auction, MoF upsized the issuance by 50% from IDR10 trillion target. FR53 (07/21) dominated the auction, with bids reached 58.7% for FR53 alone from total IDR28 trillion incoming bids (btc 2.01x). We think market will be range traded. Aside, Q2 2015 GDP and FX reserves data set to be local drivers this week, while volume continued to improve to IDR11.7 trillion.
• Asian dollar credits closed wider, amid soft bidding interest ahead of the summer holidays, with focus remained on the primary pipelines. iTraxx ex-Japan IG Index widened by 1bp to 112bps on Tuesday.