CIMB Daily Fixed Income Commentary - 16 Oct 2015

Market Roundup

• US Treasuries pared gains on Thursday, driven by profit taking activities as well as risk-on sentiment following rebound in stock market, while market continue to seek guidance from the mixed economic data releases.
• Ringgit govvies strengthened across the curve, guided by rally in MYR against the greenback. Aside, daily volume was decent at RM3.5 billion, doubled from RM1.7 billion garnered on Tuesday. On top of that, we noted that the short dated GII papers were also dealt firmer following the gains in MGS last week.
• Thai government bond market closed mixed, but was generally well supported as USD/THB went lower to near 35.20, which spurred positive net buying interest from foreign players and asset managers. Highlight was on LB196A, which transacted Bt10.2 billion on Thursday.
• Indonesia government bonds strengthened, with Rupiah gapped higher to 13,200 level. Foreign interbank was seen buying in morning session, however morning gains were erased by profit taking action afterwards, sending yield curve only lower by 2-3 bps on average. September trade balance was better than expected, posted USD 1 Billion surplus (expected surplus USD 400 million, previous month surplus USD 434 million), this was due to weaker imports on September (-25.95% y/y) compared to export (-17.98%). Market was still waiting for BI rate decision after market closed. Volume jumped to IDR 18 trillion. BI held rate unchanged at 7.50%, in line with market expectation, but highlighted the possible easing in the future if the economic activities recede. On top of that, it kept the lending facility and deposit facility rates at 8.00% and 5.50% respectively.
• Asian dollar credit market saw positive buying sentiment particularly in the new issues and HY names. The newly issued China Development Bank’s 5-year paper was dealt 7bps tighter to T+97bps. Regional HY names also posted gains up to 1.00pt across the board, buoyed by the risk-on sentiment in EM space.