CIMB Daily Fixed Income Commentary - 09 Sep 2015

Market Roundup

• US Treasuries weakened after the long weekend, guided by stock market rallies, aided by positive economic release in Eurozone. The 2Q2015 Eurozone GDP reading came higher at 1.5%, against 1.2% forecasted earlier.
• Malaysian government bonds closed rangebound but not before wiping off the morning session losses. The earlier losses came as the MYR weakened to a daily high of 4.3730, though bonds reversed direction as Asia’s worst performing currency steadied to hover around 4.3038 late in the day.
• Thai government bonds weakened further, as risk-off mode continued in the Asian markets. Yield levels for selected papers with around 10- to 20-year tenors were spotted rising 15-20bps on Tuesday. Foreign players were net sellers of a large Bt3.1 billion of THB bonds as the weak Thai currency plodded along to close the day still above the 36.00 level at 36.115.
• Indonesia government bonds weakened at Tuesday’s opening with wide bid-offer spreads, and most quotes were defensive. Volume was thin for most of the day. However nearing closing hours, bonds traded up on buying flows in response to the Shanghai stock market rally. Yields were mostly unchanged by end of day with better bid seen especially in the 10-year bucket.
• Spreads along the Asian dollar bond space tightened on Tuesday, seeing a late rebound in the Chinese stock market as well as US stock futures ahead of New York opening. However, there was little to move Asian dollar bonds on Tuesday, as risk appetite remained weak and whilst the US Treasuries market was closed overnight (Labor Day in the US). Amid the continued battering Asia’s EM currencies were going through on Tuesday, sentiment was also understandably guarded ahead of next week’s FOMC meeting. Weak China trade data pressured bonds Tuesday. China reported that exports fell 5.5% yoy in Aug.