CIMB Daily Fixed Income Commentary - 25 Aug 2015

Market Roundup

• US Treasuries strengthened amid selloff in global stock markets since last week. In addition, the downward trending crude oil prices also weighed on the UST yields, as Brent crude oil dropped further from $45.46/bbl to $42.69/bbl on Monday. The 10T yield touched the intraday-low of 1.90%, before eventually settled at 2.00%.
• Ringgit govvies suffered losses, dragged by the upward trending USD/MYR, which headed to 4.2562 late Monday. At this juncture, the MGS yield curve appeared to be relatively flat, particularly on the 10- and 15-year tenors. We reckon that the 10-year MGS yield may edge higher heading into the reopening auction.
• Thai government bonds weakened, pairing with stock market plunge on Monday. Also, the foreign players recorded net selling amount totalling Bt6.4 billion amid jittery sentiment, driven by higher USD/THB level which peaked at 35.84.
• Indonesia government bond market traded down as USDIDR breached 14000 and traded at 14035-45 prior to close. BI held reverse auction, bought back IDR 3 trillion of bonds, 100% from BI's target amount, with incoming offers reached IDR 3.66 trillion. MoF also held buyback auction in afternoon session, bought shorter dated bonds up to 4-year tenors, absorbed IDR 500 billion of bonds. We think interbank market still lightens positions, although long-term investors may try to collect selective bonds cheaply. Volume remained huge amounting IDR 15.1 trillion.
• Asian dollar credit market was under heavy selling pressure following the last Friday selloff in global stock markets. ICICI Bank Aug’20 widened by 5bps to T+183bps, about 23bps wider than the level priced earlier. Aside, HNA Capital Aug’18 widened to T+383bps, from T+377bps closed last Friday.