CIMB Daily Fixed Income Commentary - 22 Oct 2015

Market Roundup

• While there was a lack of fresh guidance from the US economic data release, the US Treasuries pared losses across the curve, amid expectation of potential expansion in ECB stimulus programme.
• Malaysian government bonds moved in sideways, while we noted mild selling pressure on the short dated papers (with tenors up to 2 years), possibly driven by foreign players who trimmed positions after the MYR continued to weaken against USD. Expect market to see thinner trading interest heading into the Malaysian Budget 2016 scheduled this Friday. Aside, the WI for 7-year MGS was last heard at 4.08/02%.
• THB denominated government bonds strengthened on Wednesday. We reckon that sentiment was supported by the new BoT governor Veerathai Santiprabhob’s slight-dovish statement, who mentioned that the current policy stance remained accommodative, despite seeing risk of downside risk to growth. Daily volume surged from Bt9.0 billion to Bt32.5 billion, aided by auctions held during mid-week.Meantime, auctions conducted for LB446A (Bt9 billion) and LB206A (Bt23.7 billion) garnered decent demand, with bid-to-cover of 3.41 and 3.23 times each. Elsewhere, average yield stopped at 3.6204% and 2.1447% respectively.
• Indonesia government bond market drifted lower on weaker Rupiah, as interbank foreign names were selling in morning session. However market was supported with buying flows that appeared on London opening hours, although the volume was not heavy enough to keep the market from sliding, with yield curve went up 6-8 bps on average. We think market will be cautious and range bound ahead of today's 5th stimulus package plan announcement. Volume decreased to IDR 7.1 trillion.
• Asian dollar credits extended losses, weighed by weaker risk-on sentiment driven by the slower growth in Japan export, and a softer China GDP reported previously.