CIMB Daily Fixed Income Commentary - 12 Apr 2016

Market Roundup

• US Treasuries closed marginally weaker on Monday. UST yields were pared lower despite the earlier rise, reacting to the higher crude oil prices during mid-day. We expect UST to remain supported in the short term period, due to the anticipation of a more gradual rate hike path, and the lack of strong economic data recently.
• USD further weakened, with DXY index dipping further to close at 93.95. EUR/USD moved in a higher range, hovered above the crucial 1.1400 level, but appeared to be capped at 1.1450. Expect to see consolidation to persist within the range of 1.1350-1.1450 in the short term. USD/JPY moved sideways after hitting the fresh low at 107.63.
• Malaysian govvies recovered a tad, aided by a stronger MYR early this week (USD/MYR dipped to the intraday-low at 3.8752). In the near term, we expect cautious support for Ringgit bonds, to be led by bets on the lower interest rate direction, reversal from recent rise in inflation and a firm Ringgit.
• Thai government bonds remained under pressure on Monday. Meantime, flows were thinner, with daily transactions recorded at Bt13.2 billion, in contrast to Bt16.7 billion registered last Friday. Expect flows to be muted ahead of the long weekend.
• Indonesian government bonds strengthened on the back of buying flows, driven by local names especially on 2- to 3-year and 8- to 10-year tenures. Similarly, fffshore names were also seen with buying interest. MoF will be holding bond auction today with indicative target of IDR12 trillion. Demand is expected to remain good especially on the medium-to-longer dated auctioned bonds. Aside, market volume increased to IDR16.3 trillion on Monday, while 60% of bonds traded were maturing between 1- to 5-year, and 22% maturing in over 10-year.