CIMB Daily Fixed Income Commentary - 20 Apr 2016

Market Roundup

• On Tuesday, US Treasuries posted mild losses due to reversal safe haven flows and tracking gains in both the equities market and global crude oil prices. However, UST losses were capped by the release of weak housing data, with the 10T moving within a narrow range of 1.77-1.80%.
• USD weakened against major rivals, dragged by the weak housing data released on Tuesday. EUR/USD trended higher to an intraday-high of 1.1385. However, the higher crude oil prices eased the risk-off sentiment, pushing the USD/JPY higher to 109.21, from 108.82. The recent rally in commodities also lifted AUD. AUD/USD rallied to peak at 0.7826, before correcting lower and to hover near 0.7794 this morning.
• Malaysian sovereign bonds weakened, pressured by profit taking activities, despite the firmer crude oil prices and Ringgit. Market is now awaiting the announcement for reopening auction of 7-year MGS. We expect the issuance size to come at RM3.5 billion. Elsewhere, investors are also eyeing the Mar CPI number, which is expected to ease to 3.4%, from 4.2% recorded a month earlier.
• Thai government bonds mildly strengthened, in conjunction with a firmer THB (USD/THB fell from 35.02 to 34.90) on Tuesday. Meanwhile, daily transactions were heavier at Bt26.2 billion, in contrast to Bt22.1 billion recorded a day prior, led by LB196A and LB25DA.
• Indonesian government bonds were traded in tight range for most of the day amid mixed flows. MoF upsized the Syariah bond issuance to IDR6.185 trillion from the IDR4 trillion target. Incoming bid was substantial and reached IDR15 trillion. We noted some buying action post auction, before the market closed, on the 10- to 20-year benchmark series, ending the day on a positive tone. Market volume increased to IDR11.6 trillion. Most heavily traded papers were those maturing over 10 years (42%) and between 5 and 10 years (31%).