CIMB Daily Fixed Income Commentary - 13 Apr 2016

Market Roundup

• US Treasuries showed weakness on Tuesday, reacting to the gains in both crude oil prices and equity market. Brent crude oil surged to the fresh high of $44.74/bbl this year, from $42.83/bbl a day prior. Crude was boosted by news that Saudi Arabia and Russia have reached consensus on an output freeze.
• Meanwhile, Philadelphia Federal Reserve president Patrick Harker sounded dovish in his latest remarks, by stating that “it might be prudent to wait until the inflation data are stronger before we undertake a second rate hike”.
• Malaysian sovereign bonds posted gains, driven by positive buying interest amid firm Ringgit and crude oil prices. Daily volume was heavy, amounting to RM4.5 billion, led by medium dated papers namely GII Jul’23, MGS Aug’23 and the 10-year MGS Sep’25. We think Ringgit and Ringgit bonds may continue see mild support in the near term period, alongside the firmer crude oil.
• Bank Negara Malaysia announced details for the reopening auction of the 20-year MGS (MGS May’35). Auction size is RM2.5 billion and tender closes 14 Apr. WI was last heard at 4.30/15%.
• Thai government bonds continued to see profit taking pressure ahead of the long weekend. Trading interest remained muted, as daily volume stood at Bt13.4 billion Tuesday. Upcoming highlight will be auction of LB25DA, which is scheduled for 20 Apr.
• Indonesian government bonds strengthened on auction day, as incoming bids were an astounding at IDR32 trillion, way above the MoF target of IDR12 trillion. As expected, 10-year and 15-year auctioned bonds were the most in demand, with both series receiving incoming bids of IDR21 trillion (66% of total incoming bids). The government maxed the issuance to IDR18 trillion. However, buyers still appeared in the market, sending the yield curve down by 5-9 bps. Trading volume increased to IDR17.5 trillion.