CIMB Daily Fixed Income Commentary - 23 Nov 2015

Market Roundup

• US Treasuries weakened a tad, after moving in sideways on Friday. The 2T yield stood above 0.90%, rising since late Oct, as market continued pricing in a Dec hike.
• EUR skid lower following the dovish statement from ECB president Mario Draghi, who said that the central bank is prepared to expand its easing measure to combat low inflation. EUR/USD drifted lower from 1.0734 to 1.0646.
• Malaysian government bonds posted gains, after the MYR staged substantial recovery against USD ahead of weekend. Notably, we noted that the yields for selective short dated papers dropped drastically by up to 38bps, driven by currency play.
• Elsewhere, in economic data release, Malaysia’s headline inflation eased marginally from +2.6% yoy in Sep to +2.5% yoy in the month of Oct, in line with market expectations. On the other hand, foreign reserves were recorded at $93.9 billion as at 13 Nov, a tad lower from $94.0 billion reported two weeks ago.
• Thai sovereign bonds continued to show weakness, despite a pullback of USD/THB heading into weekend. Meanwhile, daily volume increased from Bt18.9 billion to Bt24.0 billion on Friday.
• On the other hand, foreign player turned net buyers with total amount of Bt3.4 billion, possibly due to the recovery in THB.
• Indonesia government bond market rebounded on Friday on IDR spot appreciation in which spot IDR +1.12% against USD while 1-month NDF traded down sharply by 4%. We were seeing offshore flows on short end tenor all the day, while mixed flows on this week auctioned series especially on FR56 and FR73. We see market will be in the range 25-50 cents ahead of next week bond auction. Volume improved to IDR 10.8 trillion.
• Asian dollar credits traded in narrower range, while overall well supported amid firm risk-on appetite along with gains in equity markets. In our opinion, secondary market may trade in softer tone in near term, due to the heavier interest on primary market.