CIMB Daily Fixed Income Commentary - 28 Sep 2015

Market Roundup

• US Treasury yield curve shifted higher and steeper, on the back of stronger-than-expected 2Q2015 GDP number, which came at 3.9%, higher than 3.7% forecasted earlier.
• Malaysian sovereign bonds suffered further losses amid bearish sentiment, guided by weak Ringgit. USD/MYR stood above 4.3800, from 4.1965 closed a week prior. BNM announced reopening auction for MGS Apr’30, with an issuance size of RM2 billion, slightly lower than RM2.5 billion anticipated by us. WI was last traded at 4.73% on Friday.
• Thai government bonds remained actively traded on Friday, led by LB196A and LB21DA, which contributed combined volume of Bt9.9 billion throughout the day. Meantime, THB recovered a tad, as USD/THB edged lower from 36.27 to 36.17, easing some pressure on Thai govvies. On the other hand, speculation for further stimulus loomed, after BoT lowered the 2015 GDP forecast from 3.0% to 2.7%, while expecting exports to show contraction for the third consecutive year.
• Indonesia government bonds continued to weaken on Friday, alongside the upward trending USD/IDR. Bids were defensive, shown mostly by local banks, with selling action led by interbank foreign banks. In the near term, outlook for bond market is expected to face pressure heading into this week's bond auction, in which MoF targets for an IDR 8 trillion bond issuance. Elsewhere, daily volume remained large amounting IDR 15.7 trillion.
• Asian credits continued to widen from mid-week heading into weekend. Sentiment remained bearish, while iTraxx ex-Japan IG Index closed further wider at 151bps, compared to 126bps a week prior.