CIMB Daily Fixed Income Commentary - 23 Oct 2015

Market Roundup

• US Treasuries closed little changed, after a short-lived rally post ECB President Mario Draghi’s dovish statement, which signalled for a possible expansion in the current stimulus programme in the coming meeting. However, gains were pared amid positive US economic data releases on Thursday. The 10T yield was well supported at 2.00%.
• Ringgit govvies closed firmer, while trading activities remained pretty decent totalling RM3.3 billion, driven mainly from the 7-year MGS reopening auction on Thursday. The RM3.5 billion auction ended with soft demand, as bid-to-cover stopped at 1.67 times. Aside, average yield was generated at 4.081%. Despite that, we noted that sentiment turned slightly cautious ahead of Malaysian Budget 2016, while USD/MYR ended flat at 4.2838.
• Thai govvies posted little gains on Thursday, guided by recovery in THB against USD. Elsewhere, trading volume shrank drastically from Bt32.5 billion to Bt10.8 billion, after the auctions held for LB446A and LB206A a day ago.
• Indonesia government Bond prices well bid on Thursday since market opened as Rupiah strengthened from 13700 level to below 13500 against USD, before retracting to 13600 level. However nothing much happened in bond market as most of market players stayed at the sidelines ahead of 5th round of stimulus package announcement. We think market will be traded in range for the rest of the week before reacting to bond auction this coming Tuesday. Volume was very thin amounting IDR 4 trillion only.
• Asian dollar credits were dealt mixed, as selling pressure eased amid a lack of fresh issuance from the pipelines. iTraxx ex-Japan IG Index closed about 2bps tighter at 139bps.