CIMB Daily Fixed Income Commentary - 03 Nov 2015

Market Roundup

• US Treasuries pared gains on the back of gains in stock market, and slight better-than-expected economic data releases on Monday. The 10T yield rose and approached 2.19%, near the short-term resistance at 2.20%, while a break of 2.20% will see next resistance at 2.28%.
• DXY Index inched lower from 96.95 to 96.93 following profit taking activities. USD/JPY rebounded near 120.30 and headed higher to 120.76 on Monday. Still see range trading at this juncture, before the US NFP release this week. Meanwhile, EUR/USD was traded in a narrower range in between 1.1000-1.1050.
• Quiet day for Ringgit govvies, as daily volume shrank from RM2.8 billion to RM1.4 billion amid a lack fresh catalyst to move the market, ahead of BNM MPC meeting (we expect no change in rate), as well as US NFP this week. On the other hand, USD/MYR moved in a narrow range of 4.2900-4.3100, also offered little guidance to spur the trading activities in the Ringgit govvies.
• THB denominated government bonds recovered losses, tracking the gains in UST, while the continuous weak economic data also weighed the yields lower heading into the MPC meeting scheduled this week. Latest headline CPI shown for the month of Oct remained in the negative territory at -0.77%, against -1.07% recorded last week. We reckon that this will continue to cap the yields upsides.
• Indonesia government bond market traded sideways on Monday with no clear direction prior to local CPI data announcement. Oct CPI MoM went into deflation (-0.08% vs previous -0.05%) and both Oct CPI Core YoY and CPI YoY went down to 5.02% (previous 5.07%) and 6.25% (previous 6.83%). Post-CPI data, better bid was seen in the market, with thin activities appeared on 10-year and 15-year tenors. We think bond market will still be volatile and data-sensitive, with US NFP and unemployment data looming at the end of the week. Volume halved to IDR 6.5 trillion only.